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From headlines to earnings: Do biodiversity disclosures tighten analyst forecasts?

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Listed:
  • Sheng, Xiaohan
  • Yang, Lin

Abstract

This study investigates the impact of corporate biodiversity risk disclosures on analysts’ forecasts by taking advantage of quasi-exogenous variation in media coverage. We employ the New York Times Biodiversity News Index as an instrument for firms’ raw disclosure counts and estimate a 2SLS model. Our results show that analysts systematically incorporate biodiversity risk disclosures into their forecasts, even amid divergent views among them. We also document systematic heterogeneity in this effect across firms and industries, showing that the tightening of forecast dispersion is concentrated among larger, more conservatively financed firms and in industries with high biodiversity exposure such as energy, materials, and real estate. We use climate news index as a placebo instrument and it yields no similar effects.

Suggested Citation

  • Sheng, Xiaohan & Yang, Lin, 2025. "From headlines to earnings: Do biodiversity disclosures tighten analyst forecasts?," Finance Research Letters, Elsevier, vol. 85(PD).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pd:s1544612325014138
    DOI: 10.1016/j.frl.2025.108158
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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