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In the swirl of rumors: Corporate rumors and analyst forecast dispersion

Author

Listed:
  • Cai, Wenwu
  • Zhao, Yuyang
  • Li, Haohua
  • Xue, Zhongyi

Abstract

This study investigates whether and how corporate rumors affect analyst forecast dispersion. Using hand-collected rumors involving Chinese A-share listed firms from 2007 to 2023, we find that corporate rumors significantly increase analyst forecast dispersion, and this effect is robust to a battery of sensitivity tests. Mechanism tests reveal that corporate rumors aggravate analyst forecast dispersion by amplifying media disagreement and increasing information uncertainty. Moreover, the rumor effect is more significant for firms with higher operational uncertainty, greater information opacity, less analyst communication, and those located in regions with lower media ethics. Taken together, our findings suggest that the emergence of corporate rumors can disrupt the information environment of the rumored firms.

Suggested Citation

  • Cai, Wenwu & Zhao, Yuyang & Li, Haohua & Xue, Zhongyi, 2025. "In the swirl of rumors: Corporate rumors and analyst forecast dispersion," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    • Handle: RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925004338
    DOI: 10.1016/j.irfa.2025.104346
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    Keywords

    Corporate rumors; Analyst forecast dispersion; Media disagreement; Information uncertainty;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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