Economic policy uncertainty and analyst behaviours: Evidence from the United Kingdom

Min Chen (1) , Zhaobo Zhu (2) , Peiwen Han (3) , Bo Chen (4) , Jia Liu (5)

1 SFSU - San Francisco State University
2 Audencia Business School
3 Shenzhen University [Shenzhen]
4 Shenzhen MSU-BIT University
5 University of Portsmouth

This paper documents that both domestic and crosscountry economic policy uncertainty have significant impacts on the behaviours of domestic analysts in the United Kingdom. Specifically, domestic economic policy uncertainty has significant negative impacts on analyst earnings forecast accuracy, dispersion, and both analyst recommendation upgrades and downgrades, whereas it has no significant impact on analyst coverage in the United Kingdom. An industry analysis shows that the effects of policy uncertainties on analyst behaviours vary across industries. Moreover, European and global economic policy uncertainty have similar crosscountry impacts as U.K. policy uncertainty on analyst behaviours in the United Kingdom, whereas U.S. policy uncertainty exhibits different impacts. This study presents novel and comprehensive evidence of the impacts of policy uncertainty on an important information intermediary that has significant influences on capital market efficiency, providing practical implications for investors, analysts, corporate managers, and policy makers.

Mots clés: Economic policy uncertainty; Analyst earnings forecast accuracy; Forecast dispersion; Analyst coverage; Analyst stock recommendations

Domaines: Finance [q-fin.GN]

Min Chen, Zhaobo Zhu, Peiwen Han, Bo Chen, Jia Liu. Economic policy uncertainty and analyst behaviours: Evidence from the United Kingdom. International Review of Financial Analysis, 2022, 79, pp.101906. ⟨10.1016/j.irfa.2021.101906⟩. ⟨hal-03628930⟩