Nonfinancial Disclosure and Analyst Forecast Accuracy: Evidences from CO2 Emission and Corporate Social Responsibility Disclosures in the US
50 Pages Posted: 15 Jun 2016 Last revised: 21 Dec 2016
Date Written: November 30, 2016
Abstract
We examine the association with analyst forecast quality of both CO2 emission disclosure and corporate social reporting for a sample of large US firms. Using a matched sample we find, for a one, two and three-year horizons, a significant reduction in error, bias and forecast dispersion and a significant improvement of the analysts’ information environment for those firms that disclose CO2 emissions. However, we confirm a significant negative association between corporate social responsibility reporting and forecast error only for a one-year horizon and bias for a one and two-year horizon. Previous work had demonstrated a significant negative association between forecast error and CSR disclosure for an international sample but not for the US. Our results suggest nonfinancial disclosure is relevant even in a liberal market economy with transparent financial reporting.
Keywords: CO2 Emissions Disclosure, Financial Analysts Forecast Error, Forecast Bias, Forecast Dispersion, Corporate Social Reporting, Propensity score matching
JEL Classification: M41, M14, G14
Suggested Citation: Suggested Citation