Title：Financial Analysts Earnings Forecasts of Polluting Firms – Does Polluting Aversion Matter?
Time:2020.10.26 19:00-20:30
Tencent Meeting ID：907366816
PresenterL Professor Xu Nianxing
Host: Professor Deng Lu
Abstract: We investigate whether pollution aversion has an effect on financial analysts’ earnings forecasting for polluting firms. Using the distance to polluting firms to reflect pollution aversion, we find that financial analysts tend to make less optimistic (more pessimistic) earnings forecasts for nearby polluting firms. We find the effect of pollution aversion on forecasts is stronger if the analysts live in highly polluted areas, suggesting that a polluted environment intensifies one’s pollution aversion. Moreover, we find that the less favorable forecasting for nearby polluting firms is more salient for analysts who prefer to follow firms with a high corporate social responsibility (CSR) performance but less so for polluting firms with better CSR initiatives and those domiciled in regions with rigorous environmental regulations, suggesting that financial analysts are pollution conscious. Importantly, we find that analysts’ pollution aversion has the positive effect of strengthening polluting firms’ CSR performance, suggesting that financial analysts perform a social responsibility role.
