A new study published in the Journal of Financial Economics suggests that poor weather negatively impacts the forecasts of investment analysts. This according to an article in CityWire.

While the article notes that the paper, Air pollution, affect, and forecasting bias: Evidence from Chinese financial analysts, may seem narrow in focus, the authors explain that their “true interest is in the impact of random ‘ambient circumstances’ on judgements made by experts. It is of a similar flavor to the famous 2011 study that found Israeli judges were unlikely to grant parole requests just before lunch.”

The study authors chose the factor of air quality for the following reasons:

• Site visits by analysts must be disclosed and therefore can be tracked and compared to subsequent reports.
• Air pollution levels in China varies widely enough to have a measurable impact.

The study found a statistically significant impact in the form of lower earnings forecasts when analyst visits occurred on poorer air quality days. The study also found that the negative impact of high pollution days was no greater for companies in polluting industries such as thermal power and fermentation, the article notes.

The article notes that the research is not the first of its kind, citing a 2017 study found that bad weather leads analysts to make more pessimistic earnings-per-share forecasts and target prices. The recent study concludes that, since analyst forecasts “tend to be overly sunny anyway,” the findings shouldn’t be too concerning. In fact, according to the authors, “pollution-induced pessimism” may bring forecasts closer to “unbiasedness.”