In the swirl of rumors: Corporate rumors and analyst forecast dispersion

Wenwu Cai, Yuyang Zhao, Haohua Li and Zhongyi Xue

International Review of Financial Analysis, 2025, vol. 104, issue PA

Abstract: This study investigates whether and how corporate rumors affect analyst forecast dispersion. Using hand-collected rumors involving Chinese A-share listed firms from 2007 to 2023, we find that corporate rumors significantly increase analyst forecast dispersion, and this effect is robust to a battery of sensitivity tests. Mechanism tests reveal that corporate rumors aggravate analyst forecast dispersion by amplifying media disagreement and increasing information uncertainty. Moreover, the rumor effect is more significant for firms with higher operational uncertainty, greater information opacity, less analyst communication, and those located in regions with lower media ethics. Taken together, our findings suggest that the emergence of corporate rumors can disrupt the information environment of the rumored firms.

Keywords: Corporate rumors; Analyst forecast dispersion; Media disagreement; Information uncertainty (search for similar items in EconPapers)
JEL-codes: D80 G14 G24 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925004338

DOI: 10.1016/j.irfa.2025.104346

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