Macro uncertainty, analyst performance, and managerial ability

Min Chen (), Lufei Ruan (), Zhaobo Zhu () and Fangjun Sang ()
Additional contact information
Min Chen: San Francisco State University
Lufei Ruan: San Francisco State University
Zhaobo Zhu: Shenzhen University
Fangjun Sang: St. Bonaventure University

Eurasian Business Review, 2020, vol. 10, issue 3, No 1, 333-353

Abstract: Abstract This paper documents the systematic and negative effects of heightened macro uncertainty on financial analyst performance and the potential for managerial ability to moderate such negative effects. Specifically, we find that macro uncertainty measures are significantly and negatively correlated with the accuracy and informativeness of analysts’ earnings forecasts and positively correlated with the dispersion of earnings forecasts. Furthermore, we find that the negative effects of macro uncertainty on analyst performance are significantly mitigated in firms with high managerial ability. Our results provide a broad overview regarding the negative effects of macro uncertainty on analyst performance and indicate that managerial ability could be a potential moderator to mitigate the negative impacts of macro uncertainty on analyst performance, which is based on the upper-echelons theory.

Keywords: Economic uncertainty; Policy uncertainty; Financial analysts; Managerial ability (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s40821-020-00148-8

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