Does Share Pledging Affect Management Earnings Forecasts?

We examine the impact of share pledging (SP) on management earnings forecasts (MEFs). Our findings suggest that an SP firm has more optimistic MEFs than a non-SP firm, suggesting that SP contributes to more optimistically biased MEFs. In addition, an SP firm is more likely to provide less specific MEFs than a non-SP firm. The results are robust to alternative measures of SP and MEFs and accounting for endogeneity. Additional analysis suggests that when the controlling shareholder has a high risk of losing control rights (the firm is located in a high marketization region or the stock has a high crash risk) or the corporate governance is poor, the impact of SP on optimistic MEFs and vague MEFs is magnified.