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<p>In the first half of the year 2022, the worldwide pandemic COVID-19 finally invaded the city of Shanghai, a global finance hub in eastern China. To prevent the spread of the virus, Shanghai government enforced citywide static management, putting great pressure on companies’ daily operations and supply chains. Such a stringent epidemic prevention policy offers an excellent opportunity to extend the existing research on the association between investor sentiment and catastrophic experiences by analyzing how a serious public health emergency affects other market participants, specifically, the analysts. Applying the Difference-in-Difference method, we successfully document the causality between analysts’ stock recommendation ratings and their workplace location during the epidemic, that is, analysts residing in Shanghai tended to issue pessimistic forecasts, probably influenced by their emotional state. Furthermore, our empirical results indicate that the pandemic affects analyst sentiment via mechanisms of both limited attention and risk perception. The research contributes to the field of behavioral finance by elucidating how an exogenous shock such as a public health emergency impacts the financial market participants, providing valuable insights for both academic research and industry practice.</p>

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COVID-19 pandemic and analysts’ stock recommendation: an empirical analysis of citywide static management in Shanghai

  • 期刊论文

  • 发表日期：

    2026年2月12日

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  • Shaoqing Jia,
  • Yixun Zhou,
  • Dongxin Liu,
  • Fangzhao Zhou

摘要

In the first half of the year 2022, the worldwide pandemic COVID-19 finally invaded the city of Shanghai, a global finance hub in eastern China. To prevent the spread of the virus, Shanghai government enforced citywide static management, putting great pressure on companies’ daily operations and supply chains. Such a stringent epidemic prevention policy offers an excellent opportunity to extend the existing research on the association between investor sentiment and catastrophic experiences by analyzing how a serious public health emergency affects other market participants, specifically, the analysts. Applying the Difference-in-Difference method, we successfully document the causality between analysts’ stock recommendation ratings and their workplace location during the epidemic, that is, analysts residing in Shanghai tended to issue pessimistic forecasts, probably influenced by their emotional state. Furthermore, our empirical results indicate that the pandemic affects analyst sentiment via mechanisms of both limited attention and risk perception. The research contributes to the field of behavioral finance by elucidating how an exogenous shock such as a public health emergency impacts the financial market participants, providing valuable insights for both academic research and industry practice.