ScienceDirect Publication: Finance Research Letters
Tue, 22 Oct 2019 12:01:47 GMT language
Publication date: Available online 22 October 2019
Source: Finance Research Letters
Author(s): Sijia Yu, Junrui Zhang, Meng Qiu
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.