Circuit courts and capital market transparency: Evidence from analysts’ earnings forecasts

Abstract

This study examines how judicial quality enhancements, such as the establishment of circuit courts, affect analysts’ profits projection quality for Chinese A-share listed companies (2010–2021). A staggered difference-in-differences model shows that circuit courts significantly reduce forecast errors and dispersion, improving corporate disclosure transparency and reducing information asymmetry. Heterogeneity analysis reveals that these effects are particularly prominent in large and high-leverage firms. Moreover, the moderating role of internal control, management expenses, and disclosure quality emphasizes the importance of circuit courts in promoting financial transparency. Findings provide guidance for optimizing judicial systems, strengthening governance, and improving disclosure standards.