Journal article

Air pollution and analyst information production

Chao Kevin Li, Jin-hui Luo, Naomi S Soderstrom

Journal of Corporate Finance | Elsevier | Published : 2020


Recent studies investigate the impact of air pollution on labor productivity. We extend this literature by showing that air pollution negatively affects equity analyst information production. Analysts exposed to air pollution are less likely to issue timely forecasts or improve their forecast accuracy. Investigating the underlying mechanism, we find that analysts exposed to air pollution are less likely to provide bold (especially, negatively bold) forecasts. We also find evidence that market pricing is less sensitive to forecast revisions issued by analysts exposed to air pollution. Our results are robust to controlling for firm/analyst and time fixed effects, as well as additional specific..

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University of Melbourne Researchers


Awarded by National Natural Science Foundation of China

Funding Acknowledgements

The authors thank valuable comments from Lili Dai, Ian Gow, Jesper Haga, Andrew Jackson, Like Jiang, Flora Kuang, Richard Morris, Matthew Pinnuck, Stefan Schantl, Baljit Sidhu, Rencheng Wang and seminar participants at the EAA Annual Congress 2018 Milan, UNSW Sydney, The University of Melbourne, Xi'an International Studies University, Xi'an Jiaotong University, Zhongnan University of Economics and Law, Xiamen University and Jinan University. Luo acknowledges financial support from the National Natural Science Foundation of China (Grant No. 71572160). An earlier version of the paper was entitled 'Particulate Matter Pollution and Analyst Information Production'.