Busy analysts in uncertain times

•We assess the disturbing impact of economic policy uncertainty on forecasting activities of sell-side analysts.•Based on analysts’ earnings forecasts for Korean listed companies for 2001–2019, we document that each analyst issues more earnings forecasts and covers more firms and industries in uncer...

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Bibliographic Details
Published in:Finance research letters 2022-05, Vol.46, p.102488, Article 102488
Main Authors: Kim, Sehee, Lee, Woo-Jong, Park, Sunyoung, Sunwoo, Hee-Yeon
Format: Article
Language:English
Subjects:
Economic policy uncertainty
Forecast quality
Sell-side analyst
Workload
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Summary:•We assess the disturbing impact of economic policy uncertainty on forecasting activities of sell-side analysts.•Based on analysts’ earnings forecasts for Korean listed companies for 2001–2019, we document that each analyst issues more earnings forecasts and covers more firms and industries in uncertain periods.•More importantly, we find that the heightened workload per analyst is positively associated with forecast errors during the uncertain periods.•We extend prior studies by providing a labor-centric explanation of lower forecast quality in uncertain times. We assess the disturbing impact of economic policy uncertainty on forecasting activities of sell-side analysts. Based on analysts’ earnings forecasts for Korean listed companies for 2001–2019, we document that each analyst issues more earnings forecasts and covers more firms and industries in uncertain periods. More importantly, we find that the heightened workload per analyst is positively associated with forecast errors during the uncertain periods. We extend prior studies by providing a labor-centric explanation of lower forecast quality in uncertain times.
ISSN:1544-6123
1544-6131
DOI:10.1016/j.frl.2021.102488