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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

    (SZU - Shenzhen University [Shenzhen] = 深圳大学)

  • Min Chen

    (SFSU - San Francisco State University)

  • Peiwen Han

    (SZU - Shenzhen University [Shenzhen] = 深圳大学)

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-03926514v1
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    Cited by:

    1. Muhammad Ayaz Khan & Muhammad Shafiq & Shrafat Ali Sair & Aamir Sohail & Muhammad Hasnain Ali, 2025. "Sustainability in Retail Investment Behaviors: A Post-COVID-19 Exploration in Emerging Economy—The Mediating Role of Financial Literacy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(1), pages 3462-3480, 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. Lee, Gun & Chun, Hongmin, 2025. "North Korea threat risk, Korean business groups and corporate tax avoidance," Finance Research Letters, Elsevier, vol. 74(C).
    4. 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.
    5. Lean, Hooi Hooi & Alkhazali, Osamah M. & Gleason, Kimberley & Yeap, Xiu Wei, 2024. "Connectedness and economic policy uncertainty spillovers to the ASEAN stock markets," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 167-186.
    6. Chourou, Lamia & Himick, Darlene & Saadi, Samir, 2023. "Regulatory uncertainty and corporate social responsibility," Finance Research Letters, Elsevier, vol. 55(PB).
    7. Xiaowei Zheng & Muhammad Faheem & Khusniddin Fakhriddinovch Uktamov, 2024. "Exploring the link between economic policy uncertainty, financial development, ecological innovation and environmental degradation; evidence from OECD countries," PLOS ONE, Public Library of Science, vol. 19(9), pages 1-25, September.
    8. Vo, Hong & Nguyen, Tien, 2023. "Foreign economic policy uncertainties and corporate investments: Insights from Hong Kong," Economics Letters, Elsevier, vol. 233(C).
    9. Babaei, Hamid & Hübner, Georges & Muller, Aline, 2023. "The effects of uncertainty on the dynamics of stock market interdependence: Evidence from the time-varying cointegration of the G7 stock markets," Journal of International Money and Finance, Elsevier, vol. 139(C).
    10. Zhaobo Zhu & Licheng Sun, 2024. "Economic policy uncertainty and short-term reversals," Post-Print hal-04691597, HAL.
    11. Fei Su & Feifan Wang & Yahua Xu, 2025. "Economic Policy Uncertainty and Volatility Spillovers Among International Stock Market Indices During the COVID-19 Outbreak," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 32(1), pages 237-266, March.
    12. Song, Jian & Zhou, Xiaozhou, 2025. "How does foreign economic policy uncertainty affect domestic analyst earnings forecasts?," Global Finance Journal, Elsevier, vol. 65(C).

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