Natural Disasters and Analysts’ Earnings Forecasts

• In Event: 3. Earnings Information

Abstract

We examine whether disastrous weather events affect the mood of sell-side analysts located near such disasters. Specifically, we examine the impact of seventeen severe weather events on analyst earnings forecasts, stock recommendations, and price targets in the U.S. market. We show that analysts who directly experience disastrous weather events are more likely to issue pessimistic earnings forecasts. The effects of natural disaster risks on analysts’ forecasting performance can be amplified during economic downturns. This study contributes to the current literature on how information processing and opinions are affected by analysts’ personal experiences.

Authors

• Qiuhong Zhao, Texas A&M University - Corpus Christi

• Anh Tran, Monash University

• Cameron Truong, Monash University