Air Pollution and Analyst Information Production

56 Pages Posted: 15 Oct 2018

See all articles by Chao Kevin Li

Chao Kevin Li

University of New South Wales (UNSW)

Jin-hui Luo

Department of Accounting, School of Management, Xiamen University

Naomi S. Soderstrom

University of Melbourne

Date Written: September 22, 2018

Abstract

Recent studies investigate the impact of air pollution on labor productivity. We extend this literature by showing that air pollution negatively affects equity analysts in their role as information producers for capital markets. Compared to analysts experiencing clean air, analysts exposed to particulate matter (PM) pollution are less likely to issue timely/ bold (especially, negatively bold) forecasts or to improve their forecast accuracy. Both information supply and demand factors explain the variation in negative effects of PM pollution. Our results are robust to controlling for firm/analyst and time fixed effects, as well as additional specifications employing difference-in-difference designs and placebo tests.

Keywords: particulate matter (PM) pollution; air pollution; analysts; forecast timeliness

JEL Classification: M41

Suggested Citation

Li, Chao and Luo, Jin-hui and Soderstrom, Naomi S., Air Pollution and Analyst Information Production (September 22, 2018). Available at SSRN: https://ssrn.com/abstract=3253449 or http://dx.doi.org/10.2139/ssrn.3253449

Chao Li

University of New South Wales (UNSW) ( email )

high street
High St
sydney, NSW 2052
Australia

Jin-hui Luo

Department of Accounting, School of Management, Xiamen University ( email )

No. 422 Siming South Road
Room 428, No. 2 Jiageng Building
Xiamen, Fujian 361005
China
86 05922185870 (Phone)

Naomi S. Soderstrom (Contact Author)

University of Melbourne ( email )

Victoria
Melbourne, 3010
Australia

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