International economic policy uncertainty and analysts' earnings forecasts

Cao Hoang Anh Le, Yaowen Shan and Stephen Taylor

Pacific-Basin Finance Journal, 2024, vol. 85, issue C

Abstract: We investigate the extent to which international economic policy uncertainty (EPU) impacts analysts' earnings forecasts. Using a sample of Australian firms, we demonstrate that EPU is positively associated with the size of forecast errors and the extent of forecast dispersion. Consistent with Australia being a relatively small but open economy, we show that this EPU effect extends beyond domestic EPU to include global and country-specific EPU, most notably Chinese and US EPU. The effect of international EPU is stronger for short-term forecasts, and for firms with higher growth prospects and profitability. However, the effect of Australian EPU is more pronounced for longer horizon forecasts and for firms in the resources and mining industries, and those with lower growth and profitability. Our results are consistent with heightened international EPU negatively impacting firms' information environment, with increased variation in market participants' beliefs.

Keywords: Financial analysts; Earnings forecast; Economic policy uncertainty (search for similar items in EconPapers)
JEL-codes: G14 G17 G18 G38 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X24001549
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:85:y:2024:i:c:s0927538x24001549

DOI: 10.1016/j.pacfin.2024.102403

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().