Racial Animus, Employment Risk, and Analyst Forecasts During the COVID‐19 Pandemic

Leveraging the exogenous surge in anti‐Asian racial animus during the COVID‐19 pandemic, we examine its effects on analysts’ forecasting behavior. We find that Asian financial analysts become less bold in their forecasts, particularly among those most sensitive to career concerns. Consistent with the evidence that heightened anti‐Asian sentiment adversely affects mental health and psychological well‐being, their forecasts become more pessimistic as well. Moreover, the market responds less strongly to revisions issued by Asian financial analysts, particularly for upward revisions. These findings suggest that racial animus influences not only analysts’ forecasting decisions but also the extent to which their information is incorporated into stock prices, with potential implications for market efficiency.