Mandatory CSR disclosure and analyst forecast properties: Evidence from a quasi-natural experiment in China |
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Affiliation: | 1. School of Management, Fudan University, Shanghai, China;2. School of Business, Hong Kong Baptist University, Hong Kong, China;3. School of Accounting, Guangdong University of Finance and Economics, Guangzhou, China;4. Antai College of Economics and Management, Shanghai Jiaotong University, Shanghai, China |
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Abstract: | Based on a quasi-natural experiment that mandates a subset of listed firms to issue standalone corporate social responsibility (CSR) reports, we examine whether mandatory CSR disclosure improves analysts’ information environment. We focus on two properties of analysts’ earnings forecasts: forecast error and forecast dispersion. We find that the mandatory issuance of standalone CSR reports is related to less forecast error and less dispersed forecasts, and the effect varies with the firm-level information environment and province-level marketization. Additional tests show that the improvement in forecast properties is mainly driven by CSR reports that i) are of high quality and ii) contain more long-term-oriented information than other CSR reports. Our findings provide evidence that mandatory CSR disclosure plays an important informational role for financial analysts. |
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Keywords: | Mandatory disclosure Analyst forecast Corporate social responsibility M14 G24 M48 |
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