Impact of Corporate Social Responsibility Activity on Analysts’ Behavior

57 Pages Posted: 31 Oct 2015 Last revised: 18 Mar 2016

See all articles by Avishek Bhandari

Avishek Bhandari

University of Wisconsin Whitewater

Mark J. Kohlbeck

Florida Atlantic University - School of Accounting

Date Written: March 17, 2016

Abstract

We investigate whether or not a firm’s corporate social responsibility (CSR) activities influence analysts’ behavior. CSR is concerned with the impact of corporations’ present actions on the ecosystems, societies, and environments of the future and includes both positive and negative attributes. Firms with a lower degree of social responsibility activities (e.g., more concerns than strengths) are characterized by less reputation, high risk, high information asymmetry and non-transparent disclosures. These are attributes analyst care about and may influence their behavior. We therefore expect and find that analyst following and consensus forecast accuracy increase and that dispersion among consensus analyst forecasts and revision volatility decrease as the degree of CSR activities increases. We further find that the influence is driven by the CSR strengths while being limited by CSR concerns. We show that CSR activities are relevant to an important user group and as a result, we inform regulators as they debate a CSR reporting framework and assurance standards.

Keywords: Analyst Following, Analyst Forecasts, Corporate Social Responsibility, CSR, Forecast Accuracy, Forecast Dispersion, Forecast Revision Volatility

JEL Classification: G240, M410

Suggested Citation

Bhandari, Avishek and Kohlbeck, Mark J., Impact of Corporate Social Responsibility Activity on Analysts’ Behavior (March 17, 2016). Available at SSRN: https://ssrn.com/abstract=2684099 or http://dx.doi.org/10.2139/ssrn.2684099

Avishek Bhandari

University of Wisconsin Whitewater ( email )

Whitewater, WI 53190
United States

Mark J. Kohlbeck (Contact Author)

Florida Atlantic University - School of Accounting ( email )

777 Glades Avenue
KH 119
Boca Raton, FL 33431-0991
United States
561-297-1363 (Phone)

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