Sell-side analysts' assessment of ESG risk

• 成果类型: Article
• 署名作者: Park, Min; Yoon, Aaron; Zach, Tzachi
• 署名单位: University of Kansas; Northwestern University; University System of Ohio; Ohio State University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2024.101759
• 发表日期: 2025
• 关键词: corporate social-responsibility; performance; uncertainty; forecasts

摘要

We assess whether and how financial analysts incorporate information about downside ESG risk. Using a unique dataset on firm-day level negative ESG incidents, we find that analysts' outputs (i.e., stock recommendations, EPS forecasts, and target prices) are associated with negative future ESG risk events, especially those that are financially material. Further investigation suggests that analysts incorporate ESG risk not only through adjusting future cash flow expectations (i.e. the numerator), but also through adjusting discount rates (i.e., the denominator). Overall, our results highlight the ability of financial analysts to synthesize and integrate ESG risk into their research.