Weathering information disruption: Typhoon strikes and analysts’ forecast dispersion

Haoyu Gao, Huiyu Wen and Shujiaming Yu

Finance Research Letters, 2022, vol. 49, issue C

Abstract: This study exploits typhoon strikes as a type of exogenous shock and examines the effects of extreme weather events on information production in financial markets. Using historical typhoon information in China, we find that analysts’ forecast dispersion soars significantly when typhoons are near or land in the city in which the firm's headquarter is located. In support of the information disruption mechanism, typhoon strikes have more substantial effects on exacerbating information uncertainty and reduce site visits to firms. An alternative explanation of earnings uncertainty is excluded. Our findings contribute to research on climate-induced adverse effects related to information acquisition costs.

Keywords: Climate risk; Analysts’ forecast dispersion; Information acquisition costs; Typhoon (search for similar items in EconPapers)
JEL-codes: G14 G34 Q54 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322002860

DOI: 10.1016/j.frl.2022.103053

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