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Weathering information disruption: Typhoon strikes and analysts’ forecast dispersion

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  • Gao, Haoyu
  • Wen, Huiyu
  • Yu, Shujiaming

Abstract

This study exploits typhoon strikes as a type of exogenous shock and examines the effects of extreme weather events on information production in financial markets. Using historical typhoon information in China, we find that analysts’ forecast dispersion soars significantly when typhoons are near or land in the city in which the firm's headquarter is located. In support of the information disruption mechanism, typhoon strikes have more substantial effects on exacerbating information uncertainty and reduce site visits to firms. An alternative explanation of earnings uncertainty is excluded. Our findings contribute to research on climate-induced adverse effects related to information acquisition costs.

Suggested Citation

  • Gao, Haoyu & Wen, Huiyu & Yu, Shujiaming, 2022. "Weathering information disruption: Typhoon strikes and analysts’ forecast dispersion," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322002860
    DOI: 10.1016/j.frl.2022.103053
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    References listed on IDEAS

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    Cited by:

    1. Liu, Na & Chen, Wenchuan & Wang, Jianyong & Shi, Huaizhi, 2023. "Typhoon strikes, distracted analyst and forecast accuracy: Evidence from China," Finance Research Letters, Elsevier, vol. 51(C).

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    More about this item

    Keywords

    Climate risk; Analysts’ forecast dispersion; Information acquisition costs; Typhoon;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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