Draft2026Expectations and forecasting

Ambiguity, Pessimism, and Firm Decisions: Evidence from Corporate Forecasts around Large Shocks

Niklas Wallmeier

The firm faces

For this firm the shock is

Forecasts are

Only ambiguity gives the same answer for winners and losers of a shock. Pessimism and risk move or widen the number in the direction of the news, and firms hide only bad news. That difference is how the study tells ambiguity apart from the other explanations.

Illustrative numbers for a firm that expected revenue of 120–130 million before the shock. Switch between the four explanations, between good and bad news, and between the US and Germany.

In short

When firms cannot put probabilities on the consequences of a shock, they may stop quantifying their forecasts instead of lowering them. A model, and a test on US annual reports around COVID-19, the war in Ukraine and the 2025 tariffs, contrasted with German firms that must publish forecasts by law.

What the model predicts

Pessimism lowers the forecast, risk widens its range, and ambiguity changes its form.
Under ambiguity, firms fall silent where forecasts are voluntary, as in the US. Where forecasts are mandatory, as in Germany, they leave the shock out, coarsen the forecast or add a reservation.
This happens whether the shock is good or bad news for the firm. Pessimism and hiding bad news cannot produce that pattern.
A firm that leaves the shock out keeps its old number but invests less, as if the worst case were true.

How I test it

Filing deadlines placed thousands of US annual reports just before or just after three shocks: COVID-19 (11 March 2020), the invasion of Ukraine (24 February 2022) and the tariff announcements of 2 April 2025. Which side of the date a report falls on is close to chance, so comparing the two sides shows what the shock did to the forecast. Matched German and European firms, which must publish forecasts by law, show what a mandate changes.

Pilot results

A pilot with the management reports of 45 German firms for fiscal 2021, around the invasion of Ukraine. Only four reports were signed before the invasion, and they come from large firms that close their books early, so the pilot illustrates the pattern but is not the main test. That runs on US filings.

None of the 4 reports signed before the invasion mention the war; 38 of the 41 signed after it do, and the share rises with the time since the invasion.
The most common response is to keep the pre-war number and leave the war out of it, or to add a reservation: 20 of 38 reports.
Firms that stood to gain from the war, such as Rheinmetall and K+S, left it out just like firms that stood to lose.
The more directly a firm was exposed, the more likely it changed the form of its forecast instead of naming the war only as a risk.

The later a report was signed, the more likely it mentions the war

German management reports for 2021, by signing date relative to 24 February 2022. One dot per report; filled means the report mentions the war.

Before 24 February0 / 4

0–7 days after5 / 6

8–14 days after8 / 9

15–30 days after11 / 11

More than 30 days after14 / 15

How the 38 reports that mention the war handle it in their forecast

One dot per report.

Number kept, war not quantified · 20

Kept the number, left the war oute.g. Jungheinrich, Knorr-Bremse, Vitesco17

Forecast under a reservatione.g. Volkswagen, DMG Mori3

Form changed in another way · 5

Scenarios without probabilitiese.g. Biotest, Continental, Stada3

Coarsened, sign left openLufthansa1

Forecast suspendedHHLA, with a terminal in Odessa1

Form unchanged · 13

War named only as a riske.g. Hapag-Lloyd, Bechtle10

Priced in, no effect, or old forecast confirmed3

Cite

Niklas Wallmeier (2026). “Ambiguity, Pessimism, and Firm Decisions: Evidence from Corporate Forecasts around Large Shocks.” Work in progress.

@unpublished{wallmeier2026ambiguity,
  author = {Wallmeier, Niklas},
  title = {{Ambiguity, Pessimism, and Firm Decisions: Evidence from Corporate Forecasts around Large Shocks}},
  year = {2026},
  note = {Work in progress}
}