Analyzing Performance Forecast 'Face-Changing': A Case Study of Kuajingtong

The performance forecast system refers to the practice of listed companies publishing a forecast to the public based on their actual performance before releasing their financial reports. The purpose is to remind investors to pay attention to the company's operational situation and future trends. This system helps investors understand the company's business situation, make investment plans and decisions, and promote market transparency and investor protection. The development of this system in China can be traced back to 1998, when the China Securities Regulatory Commission issued a notice requiring listed companies to disclose 'circumstances that may lead to three consecutive years of losses or significant losses in the current year.' After decades of development, China's performance forecast system has gradually matured and become an important component of listed companies' information disclosure.

However, the phenomenon of performance forecast 'face-changing' still frequently occurs in China's market, exacerbating the situation of information asymmetry and damaging investors' interests. This article takes two instances of performance forecast 'face-changing' by Kuajingtong in 2019 and 2020 as a case study to analyze the reasons and economic consequences of performance forecast 'face-changing', and to provide practical suggestions to improve the performance forecast system. The study found that the reasons for Kuajingtong's performance forecast 'face-changing' were both external environmental and institutional factors, as well as internal control deficiencies. Specifically, from external factors, the high development risk of the industry, the impact of the COVID-19 pandemic, and the imperfect ST system all led to a decrease in the accuracy of performance forecasts, indirectly causing the phenomenon of performance forecast 'face-changing' to occur. From internal factors, the significant deficiencies in internal controls in the company's management and board of directors were also important reasons for performance forecast 'face-changing'.

The economic consequences of Kuajingtong's performance forecast 'face-changing' were also severe, with both instances causing a decline in the company's stock price, and the second instance causing the company's stock price to fall continuously for several days, severely damaging the company's image and undermining investor confidence.

This article analyzes the case of Kuajingtong's performance forecast 'face-changing' to draw conclusions and extract a series of policy recommendations. These recommendations include optimizing the ST system, introducing external pre-auditing, and strengthening internal control in companies, in order to further improve the performance forecast system, enhance market transparency, and protect investor rights.