Hate Crimes and Analyst Forecast Behaviors Amidst the COVID-19 Pandemic
59 Pages Posted: 3 Jan 2023 Last revised: 24 Nov 2024
Date Written: January 2, 2023
Abstract
We examine how forecast behaviors of East Asian financial analysts in the United States would change in the face of escalated crimes against Asians amid COVID-19. Using a DID approach, we find that compared with non-East-Asian analysts, East Asian analysts issue financial forecasts of lower boldness, higher pessimism, lower updating frequency, and weaker timeliness amidst the pandemic. The inferior forecast quality of East Asian financial analysts is associated with increased analyst herding, decreased consensus forecast accuracy, and lower post-earnings announcement abnormal returns. Our findings imply that racial animus and bias could distort forecast behaviors of analysts from ethnic minority backgrounds, resulting in reduced market information efficiency and valuation.
Keywords: COVID-19, Anti-Asian Hate Crime, Financial Analyst, Sell-Side Analyst, Forecast Boldness, Analyst Herding, Information Efficiency, Market Valuation JEL Classification: G24, G30, G40, M14, I18
JEL Classification: G24; G30; G40; M14; I18
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