Responsible Investment

Proof for relationship between CSR disclosure and analyst forecast accuracy

August 20, 2012 | 1 min read

Although there has been a dramatic increase in firms issuing stand-alone reports on CSR activities around the world, little academic evidence has been gathered regarding the value of this reporting to stakeholders in general and shareholders in particular. Dan Dhaliwal (University of Arizona and Korea University Business School), Suresh Radhakrishnan (University of Texas), and Albert Tsang and Yong George Yang (both from the Chinese University of Hong Kong) wanted to examine “whether the disclosure of CSR-related information helps to improve the accuracy of the earnings forecasts of sell-side financial analysts.” With firm-level data from 31 countries, they used the issuance of stand-alone CSR reports to proxy for disclosure of nonfinancial information.

The researchers found a relationship between the provision of CSR-related information and improvements in forecast accuracy. “This relationship is stronger in countries that are more stakeholder-oriented — i.e., in countries where CSR performance is more likely to affect firm financial performance. The relationship is also stronger for firms and countries with more transparent financial disclosure, suggesting that issuance of stand-alone CSR reports plays a role complementary to financial disclosure. These results hold after we control for various factors related to firm financial transparency and other potentially confounding institutional factors.”


This article may be reproduced according to our terms of use with attribution (and link, if online) to To be cited as: “Proof for relationship between CSR disclosure and analyst forecast accuracy”, Dan Dhaliwal, Suresh Radhakrishnan, Albert Tsang and Yong George Yang,, August 20, 2012.

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