The impact of strategic deviance on analysts' earnings forecasts: evidence from China

Purpose The purpose of this paper is to explore the effect of firm's deviant strategy on analysts' earnings forecasts and further examine the effects of firm's information transparency and environmental uncertainty on these relationships from information asymmetry perspective. Design/methodology/approach The sample includes listed firms on Shanghai and Shenzhen Stock Exchange during the period 2007-2013. Findings The results indicate that firms' deviant strategies have effects on analysts' earnings forecasts, in particular, firms with extreme strategies have less analysts following, larger forecast error and dispersion compared with firms following industry norms. Moreover, information transparency and environmental uncertainty have effects on the relationship between strategic deviance and analysts' earnings forecasts. Originality/value The findings of this study indicate that corporate strategic deviance has an effect on analysts' earnings forecasting behavior. This study enriches research studies on corporate strategy and external stakeholders and complements related research on analysts' earnings forecasts from strategic perspective and information asymmetry perspective.