Typhoon strikes, distracted analyst and forecast accuracy: Evidence from China

Na Liu, Wenchuan Chen, Jianyong Wang and Huaizhi Shi

Finance Research Letters, 2023, vol. 51, issue C

Abstract: This paper investigates the effect of typhoon strikes on analysts' forecast accuracy in the context of China. We find that analysts' exposure to typhoon strikes results in decline in their forecast quality. We attribute this to analysts' limited attention by providing evidence that: (1) analysts strategically allocate their attention to firms with more extensive institutional ownership; (2) analysts experiencing repeated typhoons would be less affected by the strikes; (3) analysts' forecasts on firms shocked by typhoons document a greater decline of quality. Our finding provides a plausibly causal effect of climate disaster on analyst forecast accuracy with the staggered strikes of the typhoon.

Keywords: Typhoon strikes; Analysts' forecast accuracy; Limited attention (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005360

DOI: 10.1016/j.frl.2022.103359

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