Short‐Term Temperature Differences and Analyst Forecasts: Empirical Evidence From Chinese Financial Analysts

ABSTRACT We examine whether short‐term temperature differences experienced by financial analysts during corporate site visits impair their forecasting performance. Using a large sample of analyst site visits to Chinese listed firms, we find that larger short‐term temperature differentials significantly reduce forecast accuracy. This effect is stronger among less experienced analysts, who are more vulnerable to cognitive impairment, and during visits with limited temperature control, when physical discomfort is likely to be more severe. We further find that analysts exposed to larger short‐term temperature differences issue less optimistic forecasts, and that the temperature effect is stronger when visiting analysts come from the same institution but weaker when they come from different institutions. Overall, our study highlights the broader influence of short‐term temperature differences on analysts’ forecasting behavior.