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Do Climate Risk Disclosures Matter to Financial Analysts?

Author

Listed:
  • Walid Ben Amar

    (Unknown)

  • Diana Castro Herrera

    (TSM - Toulouse School of Management Research - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse)

  • Isabelle Martinez

    (TSM - Toulouse School of Management Research - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse)

Abstract

This paper examines whether and when corporate disclosures about a firm's exposure to climate risks matter to financial analysts. More specifically, we investigate the association between climate risk disclosure (CRD) and two properties of financial analysts' earnings forecasts (accuracy and dispersion). We predict that climate risk financial materiality at the industry level moderates this association. Using a sample of 2184 US nonfinancial firm-year observations over the period 2010–2016, we show that CRD is associated with higher forecast precision and lower dispersion only when climate risks are perceived by investors as being financially material at the industry level. We also find that while corporate disclosures about transition risks are not associated with financial analyst forecast properties, 10-K disclosures about climate-related material physical risks reduce analyst forecast error and dispersion.

Suggested Citation

  • Walid Ben Amar & Diana Castro Herrera & Isabelle Martinez, 2024. "Do Climate Risk Disclosures Matter to Financial Analysts?," Post-Print hal-04756556, HAL.
    • Handle: RePEc:hal:journl:hal-04756556
    DOI: 10.1111/jbfa.12778
    as

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