Journal article
Understanding Analysts’ Use of Macroeconomic News
Journal of accounting, auditing & finance, v 40(4), pp 1197-1229
01 Oct 2025
Abstract
Using a comprehensive measure, the Macroeconomic News Index (MNI), we examine how analysts use macroeconomic news in their earnings forecasts. We find that analysts incorporate but underreact to quarterly macroeconomic news. Cross-sectionally, analysts’ reaction to macroeconomic news varies in a predictable way. Analysts incorporate macroeconomic news more efficiently when firms have lower exposure to the macro economy, when macroeconomic uncertainty is low, and when analysts have more industry-specific experience. Finally, we examine the implications of macroeconomic news on earnings formation and stock returns. We find that quarterly MNI is informative about the procyclicality of firms’ sales and costs and analysts underreact only to sales-side information. We also document that quarterly MNI is predictive of subsequent earnings announcement returns, indicating that investors also underreact to macroeconomic news. JEL Classifications: G12; G14; G24
Metrics
Details
- Title
- Understanding Analysts’ Use of Macroeconomic News
- Creators
- Ruiting (Dan) Dai - Drexel University, AccountingHui Ding - Shanghai Jiao Tong UniversityX. Frank Zhang - Yale University
- Publication Details
- Journal of accounting, auditing & finance, v 40(4), pp 1197-1229
- Publisher
- Sage
- Number of pages
- 33
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Accounting
- Web of Science ID
- WOS:001136811000001
- Scopus ID
- 2-s2.0-85181505153
- Other Identifier
- 991021861209804721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance