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ESG Reporting and Analysts’ Recommendations in GCC: The Moderation Role of Royal Family Directors

Author

Listed:
  • Abdulsamad Alazzani

    (College of Business and Economics, Qatar University, Doha 2713, Qatar)

  • Wan Nordin Wan-Hussin

    (Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Kedah 06010, Malaysia)

  • Michael Jones

    (School of Economics, Finance and Management, University of Bristol, Bristol BS8 1TU, UK)

  • Ahmed Al-hadi

    (Faculty of Business and Law, School of Accounting, Curtin University, Perth U1987, Australia)

Abstract

This study examines whether financial analysts consider or incorporate the environmental, social and governance disclosures (thereafter ESG) in their recommendations. We then test whether royal family directors affect this relation. Using a dataset from six Gulf Cooperation Council (GCC) countries, we find evidence that analysts’ recommendations are influenced by ESG information. Further, we find the political connection negatively moderates the relationship between sell-side analysts’ recommendations and ESG. This suggests that financial analysts may assess the ESG disclosure in those firms with the political connection of royalty, in GCC countries, as superficial compliance rather than a genuine commitment. Our results are robust when subjected to endogeneity tests.

Suggested Citation

  • Abdulsamad Alazzani & Wan Nordin Wan-Hussin & Michael Jones & Ahmed Al-hadi, 2021. "ESG Reporting and Analysts’ Recommendations in GCC: The Moderation Role of Royal Family Directors," JRFM, MDPI, vol. 14(2), pages 1-21, February.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:2:p:72-:d:495346
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    2. Kun Luo & Sirui Wu, 2022. "Corporate sustainability and analysts' earnings forecast accuracy: Evidence from environmental, social and governance ratings," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1465-1481, September.
    3. Khaled Khalaf Alafi, 2023. "The Impact of ESG on Strategic Success in Jordanian Islamic Banks," International Review of Management and Marketing, Econjournals, vol. 13(1), pages 1-10, January.
    4. Wan Nordin Wan-Hussin & Ameen Qasem & Norhani Aripin & Mohd Shazwan Mohd Ariffin, 2021. "Corporate Responsibility Disclosure, Information Environment and Analysts’ Recommendations: Evidence from Malaysia," Sustainability, MDPI, vol. 13(6), pages 1-27, March.
    5. Hamzeh F. Assous, 2022. "Saudi Green Banks and Stock Return Volatility: GLE Algorithm and Neural Network Models," Economies, MDPI, vol. 10(10), pages 1-18, October.
    6. Shuying Li & Yujie Liu & Yang Xu, 2022. "Does ESG Performance Improve the Quantity and Quality of Innovation? The Mediating Role of Internal Control Effectiveness and Analyst Coverage," Sustainability, MDPI, vol. 15(1), pages 1-25, December.

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