Corporate Social Responsibility Report Narratives and Analyst Forecast Accuracy VolkanMuslu, Sunay Mutlu, Suresh Radhakrishnan, and Albert Tsang
Journal of Business Ethics Vol. 154 (2019), pp. 1119–1142
Overview The information released in stand-alone corporate social responsibility (CSR) reports varies considerably because they are voluntary. In this study, we develop a disclosure score based on the tone, readability, length, and numerical and horizon content of CSR reports and examine its relationship to analyst forecasts. We find that high disclosure scores are associated with more accurate forecasts, while forecasts for firms that scored low are no more accurate than those for firms that do not issue CSR reports. The findings, driven by experienced rather than first- time CSR reporters, are robust to controlling for firm characteristics, including CSR activity ratings and financial narratives. Together, they suggest that more substantial CSR reports improve analysts’ forecast accuracy.
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