Pandemic Effect on Analyst Forecast Dispersion: Earnings Uncertainty or Information Lockdown?

This study examines the COVID-19 pandemic effect on financial analysts' forecast dispersion. Using public data on Chinese listed companies, we find that the unexpected inter-area mobility restrictions imposed due to COVID-19 significantly increase analysts' forecast dispersion for firms in pandemic-exposed zones. The mechanism analysis shows that analysts' site visits and face-to-face communication with target firms dramatically decrease during the COVID-19 pandemic, supporting the information lockdown hypothesis. The study also hypothetically discusses and empirically excludes earnings uncertainty explanations. Our findings add new insights to the emerging literature on the indirect economic costs of COVID-19.