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Terrorist attacks, analyst sentiment, and earnings forecasts

journal contribution
posted on 2021-04-01, 00:00 authored by C Cuculiza, C Antoniou, A Kumar, A Maligkris
We examine whether exogenous and extremely negative events, such as terrorist attacks and mass shootings, influence the sentiment and forecasts of sell-side equity analysts. We find that analysts who are local to these attacks issue forecasts that are relatively more pessimistic than the consensus forecast. This effect is stronger when the analyst is closer to the event and located in a low-crime region. Impacted analysts are also relatively more pessimistic around the one- and two-year anniversaries of the attacks. Collectively, these findings indicate that exposure to extreme negative events affects the behavior of information intermediaries and the information dissemination process in financial markets.

History

Journal

Management science

Volume

67

Issue

4

Pagination

2579 - 2608

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Location

Catonsville, Md.

ISSN

0025-1909

eISSN

1526-5501

Language

eng

Publication classification

C1 Refereed article in a scholarly journal; C Journal article