Informative or distracting: CSR disclosure of peer firms and analyst forecast accuracy |
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| Affiliation: | 1. School of Public Finance and Taxation, Zhongnan University of Economics and Law, 182 Nanhu Avenue, East Lake High-tech Development Zone, Wuhan 430073, PR China;2. School of Accounting, Nanjing University of Finance and Economics, 3 Wenyuan Road, Qixia District, Nanjing, PR China;3. School of Finance & Key Laboratory of Financial Engineering, Nanjing Audit University, 86 West Yushan Rd., Pukou District, Nanjing, PR China;4. School of Business, Lingnan University, 8 Castle Peak Road, Tuen Mun, Hong Kong;1. Audencia Business School, Research Center: Markets Technology and Society, 8 Route de la Joneliere, 44312 Cedex 3, Nantes, France;2. Heriot Watt University, Accounting, Economics and Finance SEEC, CFI, Edinburgh, Scotland EH14 4AS, UK;1. School of Accounting, Capital University of Economics and Business, Beijing 100070, China;2. Business School, University of International Business and Economics, Beijing 100029, China;3. School of Economics and Management, Tsinghua University, Beijing 100190, China;1. School of Public Administration, Nanjing university of Finance and Economics, China;2. Department of History of Science, Technology and Medicine, Peking University, China;1. School of Finance, Zhejiang Gongshang University, Hangzhou 310018, Zhejiang, China;2. School of Finance, Southwestern University of Finance and Economics, Chengdu 611130, Sicuan, China |
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| Abstract: | We investigate the relationship between the CSR disclosure of peer firms and the analyst forecast accuracy of the focal firm. We find a negative association between peer CSR disclosure and analyst forecast error of the focal firm, indicating that peer CSR disclosure is informative. This negative association is more pronounced when the information environment of the focal firm is worse, when the correlation in fundamentals between the focal firm and its peers is higher, when the business of the focal firm is less complex, when the focal firm has more expert analyst coverage, when the focal firm's financial performance is more sensitive to CSR engagement, or when the quality of peer CSR disclosure is higher. Overall, we show that peer CSR disclosure conveys value-relevant information about the focal firm. Our study enriches the literature on both analyst forecasts and peer information, and we also provide important implications for practitioners in understanding the role of CSR disclosure in capital markets. |
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