Author
Listed:
- Chengyun Liu
- Ziting Zhou
- Kun Su
- Ke Liu
- Hui An
Abstract
We examined the relationship between water risk and the information environment of financial analysts using data from Chinese listed companies from 2010 to 2020. We theorized that corporate water risk deteriorates analysts' information environment by affecting operational and financial uncertainty and corporate legitimacy. Specifically, we found that corporate water risk is associated with higher analyst forecast errors and analyst forecast dispersion and lower analyst following. This relationship weakens with corporate water information disclosure and strengthens with the environmental attention of local governments. Furthermore, we explored the impact of corporate water risk on financial risk and future financial performance and discovered that water risk increases corporate financial risk and reduces future earnings. This suggests that corporate nonfinancial risk may also include subtle financial risk, and current water risk has a certain predictive effect on future earnings, which is an interesting finding. Our results are robust to a range of tests, including instrumental variable, generalized method of moments estimates, propensity score matching, and alternative measures of analysts' information environment. Generally, our study provides insights into the complementary role of nonfinancial risks represented by water risk in understanding financial risk and has important implications for academia and practitioners in understanding the economic consequences of corporate water risk.
Suggested Citation
Chengyun Liu & Ziting Zhou & Kun Su & Ke Liu & Hui An, 2024.
"Water risk and financial analysts' information environment: Empirical evidence from China,"
Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1265-1304, February.
Handle:
RePEc:bla:bstrat:v:33:y:2024:i:2:p:1265-1304
DOI: 10.1002/bse.3539
Download full text from publisher
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:33:y:2024:i:2:p:1265-1304. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.