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The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements

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  • Bolognesi, Enrica
  • Burchi, Alberto

Abstract

We examine whether the ESG disclosure is a value driver for sell-side analysts, focusing on the largest 3000 US listed firms between 2012 and 2020. ESG represents Environmental factors, long-term Social factors, and Governance issues. These factors affect a community’s long-term sustainability and serve to guide the broader financial markets, increasingly oriented towards sustainable investing. Specifically, we question whether firms exhibiting higher disclosure scores show higher target prices. Moreover, we investigate the impact of the 2015 Paris agreements addressing climate change on stock’s evaluations. We find that: (1) analysts recognize a premium for firms more engaged in ESG transparency (2) before the Paris agreements this premium is mainly driven by Governance disclosure; (3) after the event this premium is also driven by Environmental disclosure. To the extent that we control for different model specifications, our findings suggest that ESG disclosure is a strategic tool for firms to create value.

Suggested Citation

  • Bolognesi, Enrica & Burchi, Alberto, 2023. "The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements," Research in International Business and Finance, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:riibaf:v:64:y:2023:i:c:s0275531922002136
    DOI: 10.1016/j.ribaf.2022.101827
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    Cited by:

    1. Kudryashov, Alexander, 2023. "ESG Transformation: A Roadmap for Russia’s Sustainable Development /– Tallinn : OPEN EUROPEAN ACADEMY OF PUBLIC SCIENCES OÜ, 2023," OSF Preprints 6j8ux, Center for Open Science.
    2. Pang, Jing & Liu, Zhaoda & Hou, Wanyue & Tao, Yunqing, 2023. "How does the Paris Agreement affect firm productivity? International evidence," Finance Research Letters, Elsevier, vol. 56(C).
    3. Chen, Lifeng & Khurram, Muhammad Usman & Gao, Yuying & Abedin, Mohammad Zoynul & Lucey, Brian, 2023. "ESG disclosure and technological innovation capabilities of the Chinese listed companies," Research in International Business and Finance, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    Environment social governance; ESG disclosure; Sell-side analyst; Paris agreements;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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