When Analysts Cannot Conduct Site Visits

Abstract

In this study, we explore how disruptions to analysts' on-site visits influence their information acquisition and forecast precision. Using a difference-in-differences approach, we find a marked decrease in forecast accuracy among analysts who rely on site visits compared to those who do not. The effect is intensified for less transparent firms, those with greater operational uncertainty, and solo analysts rather than teams. Additionally, analysts appear to increase their online conference attendance when unable to conduct site visits. Further, we find supporting evidence that the unique insights gained from site visits are irreplaceable, as indicated by increased stock return synchronicity and heightened retail investor internet searches for the affected firms.

Keywords: COVID-19, financial analysts, information acquisition, forecast accuracy, site visits, online conferences