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The paper examines how central bank communication affects the macro information in analyst forecasts. Using quarterly data of Chinese‐listed firms from 2007 to 2018, we find that richer and more frequent central bank communication increases the macro information contained in analyst forecasts. This effect is realized through the employment of in‐house economists by security firms. In addition, we document that the effect of central bank communication on macroeconomic information in analyst forecasts is more salient under a contractionary monetary policy regime, during a bear market, or when the economic policy is more uncertain. We also show that analyst forecasts are more sensitive to central bank communication when firms that they follow are state‐owned enterprises, have larger leverage ratios, or are located in more developed regions. In addition, analyst forecasts are more susceptible to central bank communication when the communication is in an informal oral format, when the public has more trust in the credibility of the central bank communication, and when the central bank pays more attention to expectation management after 2010. Finally, we show that richer and more frequent central bank communication also improves the accuracy of analyst forecasts. [ABSTRACT FROM AUTHOR]

Abstract This study explores asymmetric effects of monetary policy on firm scale at different firm size levels. We find that Chinese firms respond to raising benchmark lending interest rates and deposit reserve requirements by decreasing their scales. Our quantile regression results also indicate that larger firms respond more strongly to both policy instruments by adjusting their scales to a greater degree than smaller firms. Moreover, SOEs react less strongly to policy changes than non-SOEs at all firm size distribution. The impact of monetary policy on firm scale is also stronger after commercial banks having greater leeway in setting interest rates. Highlights • Explore asymmetric effects of monetary policy on firm scale at different firm size levels. • Chinese firms respond to raising benchmark interest rates and deposit reserve ratios by decreasing their scales. • Larger firms respond more strongly to both policy instruments by adjusting their scales to a greater degree. • SOEs react less strongly to monetary policy changes than privately controlled listed firms at all firm size distribution. • The impact of monetary policy on firm scale is stronger when banks having greater leeway in setting interest rates. [ABSTRACT FROM AUTHOR]