Analyst Coverage and Corporate Environmental Policies

Jing, Chenxing; Keasey, Kevin; Lim, Ivan; Xu, Bin

Abstract

Exploiting two quasi-natural experiments, we find that firms increase emissions of toxic pollution following decreases in analyst coverage. The effects are stronger for firms with low initial analyst coverage, poor corporate governance, and firms subject to less stringent monitoring by environmental regulators. Decreases in environmental-related questions raised in conference calls, an increased cost of monitoring to institutional shareholders, reductions in pollution abatement investment, and the weakening of internal governance related to environmental performance are channels through which reduced analyst coverage contributes to increases in firm pollution. Our study highlights the monitoring role analysts play in shaping corporate environmental policies.

Citation

Jing, C., Keasey, K., Lim, I., & Xu, B. (2024). Analyst Coverage and Corporate Environmental Policies. Journal of Financial and Quantitative Analysis, 59(4), 1586-1619. https://doi.org/10.1017/S0022109023000340

• Journal Article Type: Article
• Acceptance Date: Nov 30, 2022
• Online Publication Date: Mar 22, 2023
• Publication Date: 2024-06
• Deposit Date: Jan 16, 2023
• Journal: Journal of Financial and Quantitative Analysis
• Print ISSN: 0022-1090
• Electronic ISSN: 1756-6916
• Publisher: Cambridge University Press
• Peer Reviewed: Peer Reviewed
• Volume: 59
• Issue: 4
• Pages: 1586-1619
• DOI: https://doi.org/10.1017/S0022109023000340
• Public URL: https://durham-repository.worktribe.com/output/1185230
• Related Public URLs: https://eprints.whiterose.ac.uk/193945/1/Jing%20et%20al.%20JFQA_2022_Manuscript%20with%20Internet%20Appendix_SSRN.pdf