Environmental disclosure and analysts’ recommendations
About the Research
This paper investigates how financial analysts respond to firms’ environmental disclosure. Drawing on the literature on infomediaries and the distinct characteristics of environmental information, we argue that such disclosures introduce negative biases in analysts’ evaluations. Specifically, we propose that analysts apply two types of discounts to disclosing firms: a “costly-to-analyze discount,” due to the cognitive effort required to interpret environmental information, and a “deflection discount,” stemming from the perception that such disclosures are intended to distract from other negative information. Consequently, we hypothesize that firms providing environmental disclosure receive less favorable recommendations from analysts. We further expect that this negative relationship will vary as a function of firms’ conformity to disclosure standards, the expertise and resources that analysts can tap into, and in case of negative earnings surprises. Using a panel of 54,548 analyst-firm-quarter observations from 2011 to 2020, we find consistent evidence of this negative bias. However, this effect is mitigated when firms conform to disclosure standards, when analysts have greater expertise and resources, and, unexpectedly, during negative earnings surprises. These findings refine our understanding of the role of infomediaries in interpreting environmental transparency and highlight the nuanced dynamics between environmental disclosure and analysts’ recommendations.
About Anne Jacqueminet
Anne Jacqueminet is Associate Professor in the department of Public & Private Policy. She received her PhD in Strategic Management from HEC Paris and has worked as Assistant Professor in the Department of Management and Technology of Bocconi University. In her research, she investigates firms’ heterogenous approaches to the strategic implementation of sustainability practices, with a focus on complex organizations. She also looks at firm-stakeholder interactions as well as stakeholders’ reactions to firms’ social and environmental behavior and disclosure. Her work has been published in the Academy of Management Journal, Organization Science, and the Journal of International Business Studies, among others. She received the AIB Peter Buckley and Mark Casson Best Dissertation Award in 2016 and the AIB Alan Rugman Young Scholar Award in 2021. She is a member of the Steering Committee of the Alliance for Research on Corporate Sustainability (ARCS). Prior to joining academia, Anne worked as a consultant in climate change and sustainability for EY.
Date: Thursday 13 February, 2025
Time: 12:45-14:15 CEST
Venue: Room Roland Calori (B3), (Zoom link provided to registered attendees)
Reminder: We no longer provide food as per school policy…
Should you want to attend, please register at https://forms.gle/rYxqPmw7cZsCrsHU8
