 Epidemic experience, analyst sentiment, and earnings forecasts: Evidence from SARS exposureLihua Liu and Dongmin Kong The British Accounting Review, 2024, vol. 56, issue 6 Abstract: This study examines whether exposure to dangerous infectious diseases affects how analysts assess risks. We use the outbreaks of the severe acute respiratory syndrome (SARS) at analysts' previous office locations across China as a plausibly exogenous shock in the analysts' life experience. We show that compared to their less-affected counterparts, analysts in provinces with more SARS cases issue more optimistic forecasts for firms. This effect is stronger for affected analysts in provinces perceived as more salient during the SARS epidemic period. Mechanism tests show a high level of unexpected economic growth and positive media reports can motivate optimistic forecast bias induced by SARS exposure. Further heterogeneity tests indicate that our findings are particularly pronounced among busier analysts, those with less industry specialization, and female analysts. Overall, these findings suggest that exposure to the SARS epidemic influences the information intermediaries’ judgment. Keywords: SARS exposure; Analyst; Forecast optimism; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924002166 DOI: 10.1016/j.bar.2024.101452 Access Statistics for this article The British Accounting Review is currently edited by Nathan Lael Joseph and Alan Lowe More articles in The British Accounting Review from Elsevier |
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