Analyst coverage and corporate environmental policies

Jing, C., Keasey, K. ORCID: https://orcid.org/0000-0001-7645-3274, Lim, I. and Xu, B. ORCID: https://orcid.org/0000-0003-3512-5834 (2024) Analyst coverage and corporate environmental policies. Journal of Financial and Quantitative Analysis, 59 (4). pp. 1586-1619. ISSN 1756-6916 doi: 10.1017/s0022109023000340

Abstract/Summary

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.

Item Type	Article
URI	https://centaur.reading.ac.uk/id/eprint/122711
Identification Number/DOI	10.1017/s0022109023000340
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Cambridge University Press
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