Female Equity Analysts and Corporate Environmental and Social Performance *

99 Pages Posted: 24 Jul 2022 Last revised: 3 Apr 2024

See all articles by Kai Li

Kai Li

University of British Columbia (UBC) - Sauder School of Business; Asian Bureau of Finance and Economic Research (ABFER); China Academy of Financial Research (CAFR); European Corporate Governance Institute (ECGI); Canadian Sustainable Finance Network (CSFN)

Feng Mai

University of Iowa - Department of Business Analytics

Gabriel Wong

Cardiff University - Cardiff Business School

Chelsea Yang

University of British Columbia (UBC) - Sauder School of Business

Tengfei Zhang

Rutgers University - Rutgers School of Business-Camden

Date Written: June 08, 2024

Abstract

This paper investigates the impact of female analyst coverage on firms’ environmental and social (E&S) performance. Exploiting broker closures as a quasi-exogenous shock to female analyst coverage, we show that firms experiencing an exogenous drop in female analyst coverage subsequently suffer a 7% decline in E&S scores and a deterioration in real E&S outcomes. To uncover the mechanisms, we develop novel machine learning models to analyze a large corpus of over 2.4 million analyst reports and 120,000 earnings call transcripts. Our analysis reveals that female analysts are more likely to discuss E&S issues in their research reports and during earnings conference calls compared to their male counterparts. Moreover, female analysts are more likely to take actionable steps, such as downgrading stock recommendations and lowering target prices, following negative E&S discussions in their reports. By tracing the path from analyst gender to differences in behaviour and ultimately to covered firms’ E&S performance, we find evidence that gender diversity among analysts is a key driver of corporate E&S practices. Our findings highlight the importance of promoting gender diversity in the finance industry and offer novel insights into the role of female analysts in shaping corporate E&S practices.

Keywords: female equity analysts, analyst monitoring, corporate environmental and social performance, corporate governance, FinBERT, analyst reports, earnings conference calls JEL classification: G24, G30, G40 female equity analysts, analyst monitoring, corporate environmental and social performance, corporate governance, FinBERT, analyst reports, earnings conference calls JEL classification: G24, G30, G40

JEL Classification: G24; G30; G40:C45; C55

Suggested Citation

Li, Kai and Mai, Feng and Wong, Gabriel and Yang, Chelsea and Zhang, Tengfei, Female Equity Analysts and Corporate Environmental and Social Performance * (June 08, 2024). Available at SSRN: https://ssrn.com/abstract=4154013 or http://dx.doi.org/10.2139/ssrn.4154013

Kai Li (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

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Asian Bureau of Finance and Economic Research (ABFER) ( email )

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Singapore

China Academy of Financial Research (CAFR) ( email )

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Shanghai P.R.China, 200030
China

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Canadian Sustainable Finance Network (CSFN) ( email )

Queens University
Kingston, ON
Canada

HOME PAGE: http://https://smith.queensu.ca/centres/isf/research/network.php

Feng Mai

University of Iowa - Department of Business Analytics ( email )

Iowa City
United States

Gabriel Wong

Cardiff University - Cardiff Business School ( email )

Aberconway Building
Colum Drive
Cardiff, Wales CF10 3EU
United Kingdom

Chelsea Yang

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Tengfei Zhang

Rutgers University - Rutgers School of Business-Camden ( email )

227 Penn Street
Camden, NJ 08102
United States

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