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The Spillover Effect of Economic Policy Uncertainty: Evidence from Analyst Behaviors in Hong Kong

Author

Listed:
  • Zhaobo Zhu

    (Audencia Business School)

  • Hang Lin

    (Shenzhen University [Shenzhen])

  • Min Chen

    (SFSU - San Francisco State University)

  • Peiwen Han

    (Shenzhen University [Shenzhen])

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 crosscountry spillover effect of economic policy uncertainty on a developed and international financial market.

Suggested Citation

  • Zhaobo Zhu & Hang Lin & Min Chen & Peiwen Han, 2023. "The Spillover Effect of Economic Policy Uncertainty: Evidence from Analyst Behaviors in Hong Kong," Post-Print hal-03926514, HAL.
    • Handle: RePEc:hal:journl:hal-03926514
    Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-03926514
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    Cited by:

    1. Huafang Huang & Sharafat Ali & Yasir Ahmed Solangi, 2023. "Analysis of the Impact of Economic Policy Uncertainty on Environmental Sustainability in Developed and Developing Economies," Sustainability, MDPI, vol. 15(7), pages 1-19, March.
    2. Li, Dongxin & Zhang, Li & Li, Lihong, 2023. "Forecasting stock volatility with economic policy uncertainty: A smooth transition GARCH-MIDAS model," International Review of Financial Analysis, Elsevier, vol. 88(C).
    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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