Better Off at Home?: A Quantitative Study on How Teleworking Affected Forecasting Accuracy during Covid-19

Abstract: Using I/B/E/S data on equity analyst forecasts and data on Covid-19 restrictions from Our World in Data, this paper examines the effect of teleworking on the forecasting accuracy of equity analysts, letting government-induced lockdowns act as an indicator of teleworking. Results indicate that teleworking has had a negative impact on forecasting accuracy on a general level. However, this effect is only true for the initial stages of the pandemic. Over time, teleworking instead becomes positively correlated with forecasting accuracy. We also find that analysts are generally pessimistic in their predictions, but that they become more optimistic as the pandemic progresses. We argue that the initially decreasing levels of accuracy were a result of the increased levels of uncertainty and stress associated with the pandemic, rather than an effect of teleworking itself. As equity analysts became more acclimated to remote working, and as the initial shock from the pandemic settled, their forecasting accuracy improved. This helps to explain why we today observe an industry-wide shift to increased use of teleworking and hybrid models, which persist even after the pandemic. The pandemic allowed people to explore the benefits of remote working. Moreover, these findings open for interesting discussions on the future use of teleworking within the banking sector.