The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements

Bolognesi, Enrica; Burchi, Alberto

doi:10.1016/j.ribaf.2022.101827

Cited by 25 publications

(12 citation statements)

References 75 publications

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“…Prior studies on ESG disclosure have also shown that the higher level of ESG disclosure by enterprises can alleviate information asymmetry, and help enterprises obtain higher analyst pricing (Bolognesi & Burchi, 2023). In addition, Schiemann and Tietmeyer (2022) found that ESG disclosure can improve the accuracy of analysts' forecasts under ESG controversies.…”

Section: Literature Review and Hypothesesmentioning

confidence: 94%

“…As important non‐financial information, ESG information disclosure can provide investors with environmental, social, and governance information, help outsiders better understand the sustainability of enterprises, and help investors make reasonable decisions. Prior studies on ESG disclosure have also shown that the higher level of ESG disclosure by enterprises can alleviate information asymmetry, and help enterprises obtain higher analyst pricing (Bolognesi & Burchi, 2023). In addition, Schiemann and Tietmeyer (2022) found that ESG disclosure can improve the accuracy of analysts' forecasts under ESG controversies.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…On the one hand, most studies have found that enterprises with higher ESG disclosure level can obtain higher pricing (Broadstock et al, 2021; Nollet et al, 2016). In addition, enterprise ESG disclosure can also improve stock liquidity and analyst pricing (Bolognesi & Burchi, 2023; Chen, Yang, et al, 2023). On the other hand, Derwall et al (2005) found that mispricing, that is, underestimating the benefits of ESG or overestimating its costs, may be responsible for the excess returns that enterprises can obtain with good ESG performance.…”

Section: Introductionmentioning

confidence: 99%

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Environmental, social, and governance disclosure and capital market mispricing

Wang,

Kong

et al. 2023

Corp Soc Responsibility Env

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With the development of sustainability, ESG information has become a key factor for investors in capital market, but researches on the relationship between ESG disclosure and capital market efficiency has not been clear. Using the data of Chinese A‐share listed companies from 2011 to 2019, this study examined the relationship between ESG disclosure and market mispricing. The results showed that the higher ESG disclosure with lower level of mispricing, which was also verified in both the overvalued and undervalued samples. The test of environmental (E), social (S), and, governance (G) showed that environmental disclosure can restrain the over‐valuation, social disclosure can mitigate the under‐valuation, and corporate governance disclosure has no significant impact on the mispricing. In addition, this paper identified the effect of ESG disclosure on market mispricing by using exogenous market fluctuation. Furtherly, mechanism analysis results showed that ESG disclosure can affect pricing deviation through signaling and supervision effects.

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Section: Literature Review and Hypothesesmentioning

confidence: 94%

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Environmental, social, and governance disclosure and capital market mispricing

Wang,

Kong

et al. 2023

Corp Soc Responsibility Env

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“…The results demonstrate that the ESG score positively impacts the target price accuracy. Bolognesi and Burchi (2023) examined whether ESG disclosure is a value driver for sell-side analysts of 3000 US-listed firms and concluded that analysts recognise a premium for firms more engaged in ESG transparency.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In recent years, the use of price targets has become increasingly prevalent in the financial industry, with many analysts using these targets to provide investment recommendations (Bahaji 2021) or to establish connections to other important variables such as environmental sustainability and governance (ESG) scores (Bolognesi and Burchi 2023;Cheng et al 2019).…”

Section: Introductionmentioning

confidence: 99%

Portfolio Performance of European Target Prices

Almeida¹,

Gaspar

2023

JRFM

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This paper examines the performance of actively managed portfolios constructed using target price recommendations provided by analysts. We propose two methods for constructing portfolios based on Bloomberg’s 12-month target price consensus, which serves as a signal to buy or sell assets. Using a sample of 50 European stocks over a 19-year period (from 1 April 2004 to 31 March 2023), we compare the performance of target-price-based portfolios to traditional alternatives, such as a naïve homogeneous portfolio and the Eurostoxx 50 index, as well as to passive portfolios based on average recommendations. We also look into the mean-variance efficiency of these portfolios and find that all exhibit similar levels of efficiency, which are well below the performance of the theoretical tangent portfolios. Our results indicate that target-price-based portfolios show performance very close to that of the naïve homogeneous portfolio. Even the passive “average” target price portfolios, which require previous knowledge of targets for the entire investment period, are unable to outperform the naïve portfolio. Our main findings are based on a 15-year investment horizon but are robust when considering smaller maturities and out-of-sample data. We also investigate the impact of rebalancing on portfolio performance and find that it does pay off in the long run (over an 8-year investment period), but the frequency of rebalancing matters. Rebalancing only once a year is as detrimental to performance as not rebalancing at all. However, it is unclear whether the transaction costs associated with frequent rebalancing would offset any relative outperformance. Overall, our study contributes to the literature on portfolio management and market efficiency by demonstrating the potential benefits and limitations of using target price recommendations to construct portfolios, highlighting the importance of carefully considering rebalancing strategies to achieve optimal performance.

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Navigating the impact: A comprehensive analysis of ESG disclosure consequences through systematic review

Li,

Saat,

Khatib

et al. 2024

Bus Strat Dev

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The purpose of this article is to provide a comprehensive and systematic assessment of the literature on the consequences of environmental, social, and governance (ESG) disclosure by means of content analyses. Using a systematic approach, a sample of 165 studies was collected from the Web of Science database and evaluated on the basis of econometric and content analyses, including publication trends, geographical distribution, theories and consequence associated with ESG disclosure (investment and innovation of firms, financing cost and method, operations and financial risk of firms, firm performance and value and others), provides some direction for future investigation. According to the analysis, the literature was more interested in the stakeholder theory when examining the effects of ESG disclosure on areas including company innovation and investment, financing costs and methods, financial risk and operations, business performance, and others. Even though most of the literature has focused on firm performance and value, there is still no clear understanding of the relationship. Also, limited work was found on the investment and innovation of firms, and financing cost and method, while the impact of operations and financial risk of firms has yet to be explored. Meanwhile, this study also identified the impact of ESG disclosure on analysts, audit fees, and earnings management as a new research direction. Finally, this study innovates new findings that institutional pressures may have an impact on the consequences of ESG disclosure, a topic not found in previous studies.

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The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements

Cited by 25 publications

References 75 publications

Environmental, social, and governance disclosure and capital market mispricing

Environmental, social, and governance disclosure and capital market mispricing

Portfolio Performance of European Target Prices

Navigating the impact: A comprehensive analysis of ESG disclosure consequences through systematic review

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