Climatic Disasters and Distracted Analysts

50 Pages Posted: 8 Jul 2020 Last revised: 27 Oct 2021

See all articles by Yuqi Han

Yuqi Han

Temple University

Connie X. Mao

Temple University - Fox School of Business and Management; Temple University - Department of Finance

Hongping Tan

McGill University

Chi Zhang

University of Massachusetts Lowell

Date Written: June 12, 2020

Abstract

Using staggered climatic disasters in the U.S, we find that earnings forecasts by analysts who experienced a major climatic disaster become less accurate than those by the unaffected analysts within three months after the disaster due to distracted attention. Stock prices respond less strongly to earnings revisions by disaster-zone analysts. Disaster-zone analysts are more likely to reiterate their previous forecasts and strategically allocate their attention to firms of greater importance or salience. Climatic disasters adversely affect the information environment of firms unaffected by the disasters but covered by disaster-zone analysts, suggesting a spillover effect of idiosyncratic shocks via financial intermediaries.

Keywords: Climatic Disasters; Analyst; Earnings Forecast; Limited Attention; Salience; Spillover

JEL Classification: G24, G41, Q54

Suggested Citation

Han, Yuqi and Mao, Connie X. and Tan, Hongping and Zhang, Chi, Climatic Disasters and Distracted Analysts (June 12, 2020). Fox School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=3625803 or http://dx.doi.org/10.2139/ssrn.3625803

Yuqi Han

Temple University ( email )

Philadelphia, PA 19122
United States

Connie X. Mao

Temple University - Fox School of Business and Management ( email )

416 Alter Hall
Philadelphia, PA 19122
United States
215-204-4895 (Phone)
215-204-1697 (Fax)

Temple University - Department of Finance ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-4895 (Phone)
215-204-1697 (Fax)

Hongping Tan

McGill University ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

Chi Zhang (Contact Author)

University of Massachusetts Lowell ( email )

Pulichino Tong Building
Manning School of Business
Lowell, MA 01854
United States

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