Abstract: This paper studies the causes of the positive earnings surprise in China’s listed companies. It is found that except the companies with better performance, none of the management of China’s listed companies has realized the positive earnings surprise through earnings management or expectation management. The other cause is that in order to establish or maintain a good relationship with the management of the listed companies so as to gain some private information, the financial analysts try to appeal to the management. It is thus clear that there exist interest conflicts between the listed companies and financial analysts, and the root of the interest conflicts is the selective disclosure of information by the listed companies. Thus, in order to standardize the development of the profession of financial analysts, it is necessary to improve the independence of financial analysts, perfect the fair information disclosure system, and increase the cost of violation of the fair information disclosure rules.

Key words: listed company; positive earnings surprise; earning management; expectation management