The spillover effect of natural disaster on analyst forecast inaccuracy: Evidence from shared analyst coverage

This paper studies the spillover effect of natural disasters on analyst forecast performance for unaffected firms. Controlling for analyst, firm, and brokerage characteristics, we find that analysts, who track disaster-stricken firms, issue inaccurate forecasts for unaffected firms due to limited attention. Our analysis further reveals that analysts are more likely to issue inaccurate forecasts when they have less experience and when the impact of natural disasters is more severe. These findings show how natural disasters can alter the information output of analysts within the shared analyst-coverage network.