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<p>How does import penetration from a foreign economy affect financial analysts’ forecast accuracy, and do cultural ties to that economy provide an informational advantage? We examine these questions using 504,491 analyst earnings forecasts for U.S. manufacturing firms from 2001 to 2024, leveraging exogenous variation in Chinese import penetration driven by productivity growth in China and its WTO accession. We find that rising Chinese import penetration significantly impairs forecast accuracy: a one-standard-deviation increase reduces accuracy by 12.1% on average. However, analysts of Chinese origin are notably less affected by this accuracy decline, producing forecasts that are 33% more accurate than those of non-Chinese-origin analysts when covering firms exposed to import penetration. This information advantage is stronger among analysts with greater industry expertise and prior experience with Chinese firms, in industries or brokerages with higher concentrations of Chinese analysts, and during periods of heightened U.S.–China geopolitical tension. Capital markets appear to recognize this advantage: as import penetration from China intensifies, trading volume and liquidity increase disproportionately around forecasts issued by Chinese-origin analysts. Our findings highlight how international economic shocks could reshape domestic information intermediaries and demonstrate that culturally embedded knowledge may serve as a strategic informational resource.</p>

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Forecasting under uncertainty: import penetration and analysts’ cultural advantage

  • 期刊论文

  • 发表日期：

    2026年6月2日

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  • In Gyun Baek,
  • Minjae Koo

摘要

How does import penetration from a foreign economy affect financial analysts’ forecast accuracy, and do cultural ties to that economy provide an informational advantage? We examine these questions using 504,491 analyst earnings forecasts for U.S. manufacturing firms from 2001 to 2024, leveraging exogenous variation in Chinese import penetration driven by productivity growth in China and its WTO accession. We find that rising Chinese import penetration significantly impairs forecast accuracy: a one-standard-deviation increase reduces accuracy by 12.1% on average. However, analysts of Chinese origin are notably less affected by this accuracy decline, producing forecasts that are 33% more accurate than those of non-Chinese-origin analysts when covering firms exposed to import penetration. This information advantage is stronger among analysts with greater industry expertise and prior experience with Chinese firms, in industries or brokerages with higher concentrations of Chinese analysts, and during periods of heightened U.S.–China geopolitical tension. Capital markets appear to recognize this advantage: as import penetration from China intensifies, trading volume and liquidity increase disproportionately around forecasts issued by Chinese-origin analysts. Our findings highlight how international economic shocks could reshape domestic information intermediaries and demonstrate that culturally embedded knowledge may serve as a strategic informational resource.