ESG performance and analyst recommendations: evidence from sustainability analysts in the Chinese market

Chen, Shiqiang1; Cheng, Mian2; Luo, Yonggen3; Tsang, Albert2

2024-07-01

10.1108/JAL-04-2024-0063

JOURNAL OF ACCOUNTING LITERATURE   影响因子和分区

0737-4607

2452-1469

PurposeIn this study, we examine the influence of a firm's environmental, social, and governance (ESG) performance on analysts' stock recommendations and earnings forecast accuracy in the Chinese context.Design/methodology/approachWe take a textual analysis approach to analyst research reports issued between 2010 and 2019, and differentiate between two distinct analyst categories: "sustainability analysts," which refer to those more inclined to incorporate ESG information into their analyses, and "other analysts."FindingsOur evidence indicates that sustainability analysts tend to be significantly more likely than others to provide positive stock recommendations and demonstrate enhanced accuracy in forecasting earnings for companies with superior ESG performance. Our additional analyses reveal that this finding is particularly prominent for analysts who graduated from institutions emphasizing the protection of the environment, those recognized as star analysts, those affiliated with ESG-oriented brokerages, and forecasts made by analysts in the later part of the sample period. Our findings further indicate that sustainability analysts exhibit a more pronounced negative response when confronted with a negative ESG event.Originality/valueIn general, the evidence from this study reveals the interplay between ESG factors and analyst behavior, offering valuable implications for both financial analysts and sustainable investment strategies.

ESG Analysts recommendation Information processing Accuracy China

ESCI

英语

其他

National Natural Science Foundation of China[72002043] ; Guangdong Natural Science Foundation Project[2024A1515011315]

Business & Economics

Business, Finance

WOS:001273922800001

EMERALD GROUP PUBLISHING LTD

Web of Science

1.Univ Macau, Dept Accounting & Informat Management, Taipa, Peoples R China
2.Southern Univ Sci & Technol, SUSTech Business Sch, Shenzhen, Peoples R China
3.Guangzhou Univ, Sch Management, Guangzhou, Peoples R China

Chen, Shiqiang,Cheng, Mian,Luo, Yonggen,et al. ESG performance and analyst recommendations: evidence from sustainability analysts in the Chinese market[J]. JOURNAL OF ACCOUNTING LITERATURE,2024.

Chen, Shiqiang,Cheng, Mian,Luo, Yonggen,&Tsang, Albert.(2024).ESG performance and analyst recommendations: evidence from sustainability analysts in the Chinese market.JOURNAL OF ACCOUNTING LITERATURE.

Chen, Shiqiang,et al."ESG performance and analyst recommendations: evidence from sustainability analysts in the Chinese market".JOURNAL OF ACCOUNTING LITERATURE (2024).