Political uncertainty and analysts’ forecasts: Evidence from China

Sijia Yu, Junrui Zhang and Meng Qiu

Finance Research Letters, 2020, vol. 36, issue C

Abstract: We examine the impact of political uncertainty on analysts’ earnings forecast accuracy and forecast dispersion. Using the turnover of local government leaders in China, we find robust evidence that there is a reduction in forecast accuracy and an increase in forecast divergence in the presence of political uncertainty. Further, we document the negative relationship between political uncertainty and forecast accuracy is more pronounced when the level of political uncertainty is higher and when companies are more sensitive to political uncertainty. Our findings extend our understanding of political uncertainty to analysts’ behaviors.

Keywords: Political uncertainty; Analysts’ earnings forecast; Forecast accuracy; Forecast dispersion; Political turnover (search for similar items in EconPapers)
JEL-codes: G10 G20 M40 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:36:y:2020:i:c:s1544612319305033

DOI: 10.1016/j.frl.2019.101340

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