This paper explores the impact of government intervention on local analysts’ earnings forecasts, based on a scenario of financial misconduct in Chinese state-owned enterprises (SOEs). The results show that, under the influence of the government, local analysts’ earnings forecasts for SOEs with financial misconduct are less accurate and more optimistically biased. Further heterogeneity analysis reveals that forecast bias by local analysts is greater when officials have stronger promotion incentives, when regions are less market-oriented and have a larger share of the state-owned economy, and when SOEs contribute more to taxation and employment. In further analysis, we find that local analysts have a more optimistic tone in reports targeting non-compliant SOEs. Local analysts who depend heavily on political information will also issue more biased and optimistic forecasts on SOEs with violations. Finally, as a reward for achieving government goals, the local brokerages affiliated with these analysts and providing these optimistic forecasts are more likely to become underwriters in seasoned equity offerings of SOEs. This paper reveals that government intervention significantly influences analyst forecasts, providing implications for understanding the sources of analyst forecast bias.