Impact of CEO turnover on analyst earnings forecasts: A communication disruption perspective

This study examines how CEO turnover affects analyst earnings forecasts in Chinese A-share listed firms, focusing on communication disruptions in China's evolving disclosure environment. Using a difference-in-differences approach, external CEO succession is found to significantly increase forecast errors and optimism due to increased information asymmetry, whereas internal succession causes less disruption. Prior analyst coverage of the new CEO's former firm mitigates these effects, enhancing accuracy and reducing bias. Over time, analysts revise optimistic forecasts toward greater accuracy. These findings emphasize the CEO's role in information disclosure and offer guidance for enhancing communication during leadership transitions.