Analyst Coverage and Corporate Environmental Policies

Analyst Coverage and Corporate ESG Performance

“…A possible reason for this may be that, under the ESG framework, the score for the corporate governance dimension is much higher than that of the environmental dimension and social dimension, and the corporate governance level of most Chinese listed firms is better than the corporate social and environmental performance, so the analyst promotion effect is not obvious. Previous studies have shown that analyst coverage enhances socially responsible donations [36], reduces employee injuries [20], and shapes corporate environmental policies [21]. Our results were consistent with the findings that analysts pay attention to corporate non-financial information, and analyst coverage improves corporate non-financial performance.…”

“…It has been found that firms covered by more analysts engage in less earnings management [29,30]. Analysts also pay close attention to corporate non-financial information [31]; Jing, Keasey, Lim, and Xu [21] found that analysts play a monitoring role in influencing corporate environmental policy. Bradley, Mao, and Zhang [20] provided evidence that analyst coverage increases the emphasis on workplace safety issues and improves employee welfare.…”

“…Lastly, we have added to the literature on analyst coverage and firms' sustainable development. Existing studies have reported that analyst coverage increases corporate philanthropy [19], improves workplace safety and increases employee welfare via a supervisory role [20], and shapes corporate environment policies by increasing the cost of a firm's environmental misbehaviors [21]. These studies proved that analyst coverage is a driving force in promoting corporate sustainable development, but they focused on analyst coverage within a specific dimension of ESG; there remains a lack of direct tests of how analyst coverage affects firm sustainability development under the overall framework of corporate ESG.…”