Analyst forecasts during COVID-19: Does prior epidemic experience matter?

Nishant Agarwal, Amna Chalwati

Research output: Contribution to journalArticlepeer-review


The authors examine the role of analysts’ prior experience of forecasting for firms exposed to epidemics on analysts’ forecast accuracy during the COVID-19 pandemic.

The authors examine the impact of analysts’ prior epidemic experience on forecast accuracy by comparing the changes from the pre-COVID-19 period (calendar year 2019) to the post-COVID period extending up to March 2023 across HRE versus non-HRE analysts. The authors consider a full sample (194,980) and a sub-sample (136,836) approach to distinguish “Recent” forecasts from “All” forecasts (including revisions).

The study's findings reveal that forecast accuracy for HRE analysts is significantly higher than that for non-HRE analysts during COVID-19. Specifically, forecast errors significantly decrease by 0.6% and 0.15% for the “Recent” and “All” forecast samples, respectively. This finding suggests that analysts’ prior epidemic experience leads to an enhanced ability to assess the uncertainty around the epidemic, thereby translating to higher forecast accuracy.

Research limitations/implications
The finding that the expertise developed through an experience of following high-risk firms in the past enhances analysts’ performance during the pandemic sheds light on a key differentiator that partially explains the systematic difference in performance across analysts. The authors also show that industry experience alone is not useful in improving forecast accuracy during a pandemic – prior experience of tracking firms during epidemics adds incremental accuracy to analysts’ forecasts during pandemics such as COVID-19.

Practical implications
The study findings should prompt macroeconomic policymakers at the national level, such as the central banks of countries, to include past epidemic experiences as a key determinant when forecasting the economic outlook and making policy-related decisions. Moreover, practitioners and advisory firms can improve the earning prediction models by placing more weight on pandemic-adjusted forecasts made by analysts with past epidemic experience.

The uncertainty induced by the COVID-19 pandemic increases uncertainty in global financial markets. Under such circumstances, the importance of analysts’ role as information intermediaries gains even more importance. This raises the question of what determines analysts’ forecast accuracy during the COVID-19 pandemic. Building upon prior literature on the role of analyst experience in shaping analysts’ forecasts, the authors examine whether experience in tracking firms exposed to prior epidemics allows analysts to forecast more accurately during COVID-19. The authors find that analysts who have experience in forecasting for firms with high exposure to epidemics (H1N1, Zika, Ebola, and SARS) exhibit higher accuracy than analysts who lack such experience. Further, this effect of experience on forecast accuracy is more pronounced while forecasting for firms with higher exposure to the risk of COVID-19 and for firms with a poor ex-ante informational environmen
Original languageEnglish
Article number4625709
Number of pages19
JournalChina Accounting and Finance Review
Issue number4
Early online date18 Jul 2023
Publication statusPublished - 31 Oct 2023


Dive into the research topics of 'Analyst forecasts during COVID-19: Does prior epidemic experience matter?'. Together they form a unique fingerprint.

Cite this