Government Public Information and the Quality of Analysts Earnings Forecasts

Financial analysts serve as critical information intermediaries in capital markets by aggregating macroeconomic, industry, and firm-specific data from diverse sources to generate earnings forecasts. While recent research highlights the increasing integration of alternative data into forecasts, there is limited evidence regarding the impact of government-generated public data on analysts' performance, especially in emerging markets where information environments are often less transparent. This study investigates whether increased availability of government public information enhances analyst forecast quality by leveraging the staggered launch of municipal public data platforms across 147 Chinese cities as an exogenous shock. Employing a multi-period difference-in-differences approach, the analysis focuses on state-owned enterprises listed on China's A-share market between 2007 and 2022, resulting in a final sample of 170,579 analyst-firm-year observations. The empirical model incorporates comprehensive controls for analyst, firm, and city-level characteristics, alongside fixed effects for analysts, firms, and years, with robustness verified through parallel trends validation, placebo tests, and propensity score matching. The results demonstrate that greater government public information availability significantly improves analyst forecast accuracy, representing an economically meaningful 18.4% increase relative to the sample mean. Cross-sectional analyses reveal that these benefits are most pronounced for firms with lower transparency, for more experienced analysts capable of integrating diverse data, and within weaker local information environments in smaller cities. Additional tests indicate that the introduction of public data platforms leads to increased analyst coverage and forecast volume while simultaneously reducing forecast dispersion. Furthermore, analysts decrease their reliance on private information sources as they incorporate more authoritative and credible government data into their models, suggesting that public information acts as a substitute for costly private information acquisition. These findings suggest important policy implications, highlighting that open data platform serves as a vital tool for alleviating information asymmetry, improving the information environment, and generating substantial economic value in emerging markets. By providing standardized, high-quality public information, government initiatives reduce the time and financial costs associated with information search and verification. Ultimately, increased transparency enhances capital market efficiency and facilitates better resource allocation by supporting critical market intermediaries like analysts.