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ESG Rating Agency Coverage and Analysts’ Earnings Forecasts: Evidence from China

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  • Mian Cheng
  • Li Ji
  • Albert Tsang
  • Zijian Xu

Abstract

Utilizing data from six major environmental, social, and governance (ESG) rating agencies in China, we find that a greater level of coverage by ESG rating agencies is associated with smaller forecast errors and lower dispersion in analyst earnings forecasts for the covered firms. However, a higher level of ESG rating dispersion among agencies weakens this relationship. Cross-sectional analysis reveals that the impact of ESG rating coverage on analyst forecasts is more significant for firms with high levels of information asymmetry and a high proportion of sustainability analysts among tracking analysts. Overall, our findings suggest that comprehensive ESG information provided by multiple rating agencies can significantly influence financial analysts’ ability to predict firms’ future financial performance.

Suggested Citation

  • Mian Cheng & Li Ji & Albert Tsang & Zijian Xu, 2025. "ESG Rating Agency Coverage and Analysts’ Earnings Forecasts: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 61(11), pages 3332-3358, September.
    • Handle: RePEc:mes:emfitr:v:61:y:2025:i:11:p:3332-3358
    DOI: 10.1080/1540496X.2025.2479637
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