Closing the loop on forecasts: Circular economy disclosure via social media platforms and analyst forecast quality

As corporate sustainability models increasingly transition toward circular economy (CE) paradigms, the disclosure of related practices has gained strategic relevance for market participants seeking to assess firms' long-term value creation and risk exposure. Within this evolving landscape, CE disclosure (CED) has emerged as a distinct dimension of non-financial reporting that informs stakeholders about the design, implementation, and outcomes of circular strategies. This study investigates the influence of CED via Twitter on analyst behavior. More specifically, and grounded in voluntary disclosure theory, it explores whether social media–based CED enhances forecast accuracy and reduces forecast dispersion. To this end, a panel dataset of 583 firm-year observations from 135 firms listed on the S&P 500 index and operating in environmentally sensitive sectors over the 2020–2024 period is analyzed. The extent of CED is measured using dictionary-based content analysis of corporate tweets. The empirical results reveal that higher levels of CED via Twitter are positively associated with analysts' forecast accuracy and negatively associated with forecast dispersion. These findings suggest that Twitter serves as an effective informal channel for conveying decision-useful CE information to financial market participants. This study contributes to the literature by extending research on both the effects of CED and the link between sustainability communication and analyst forecast quality.