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The spillover effect of economic policy uncertainty: Evidence from analyst behaviors in Hong Kong

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  • Zhu, Zhaobo
  • Lin, Hang
  • Chen, Min
  • Han, Peiwen

Abstract

This paper examines the spillover effect of economic policy uncertainty on the financial market by comparing how local and external policy uncertainties affect the behaviors of analysts in an international financial center. Unlike findings in the United States and the United Kingdom, high local policy uncertainty does not significantly decrease analysts’ earnings forecast accuracy or exacerbate forecast dispersion in Hong Kong. In contrast, high external policy uncertainty from Mainland China, the U.S., Europe, and across the globe significantly decrease analysts’ forecast accuracy in Hong Kong, although these external policy uncertainties have also no significant effect on forecast dispersion. In addition, both local and external policy uncertainties have significant impact on analyst coverage and recommendations. These results provide strong evidence on the cross-country spillover effect of economic policy uncertainty on a developed and international financial market.

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  • Zhu, Zhaobo & Lin, Hang & Chen, Min & Han, Peiwen, 2023. "The spillover effect of economic policy uncertainty: Evidence from analyst behaviors in Hong Kong," Finance Research Letters, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:finlet:v:52:y:2023:i:c:s1544612322007462
    DOI: 10.1016/j.frl.2022.103570
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    References listed on IDEAS

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    3. Chourou, Lamia & Himick, Darlene & Saadi, Samir, 2023. "Regulatory uncertainty and corporate social responsibility," Finance Research Letters, Elsevier, vol. 55(PB).

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