Do sustainability reporting standards affect analysts’ forecast accuracy?
Sustainability Accounting, Management and Policy Journal
ISSN: 2040-8021
Article publication date: 9 January 2024
Issue publication date: 2 February 2024
Abstract
Purpose
This study aims to contribute to the emerging debate about materiality with novel insights about the signaling effects related to the disclosure of environmental, social and governance (ESG) information using the guidelines released by the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB).
Design/methodology/approach
An empirical assessment using panel data analysis was built to evaluate the relationship between sustainability reporting standards and analysts’ forecast accuracy.
Findings
The analysis revealed that the proliferation of sustainability reports prepared on mandatory or voluntary basis mitigated the signaling effects related to the disclosure of ESG information by companies. Furthermore, the additional analysis conducted considering sustainability reporting quality and ESG performance revealed the existence of mixed effects on analysts’ forecasts accuracy. Therefore, the insights highlighted the need to consider a cautionary approach in evaluating the contribution of ESG data to financial evaluations.
Practical implications
The practical implications consist of identifying criticisms related to disclosing ESG information by listed companies. In detail, the analysis underlines the need to enhance reporting standards’ interoperability to support the development of more accurate analysis by investors and financial experts.
Social implications
The analysis reveals increasing attention investors pay to socially responsible initiatives, confirming that financial markets consider sustainability reporting as a strategic driver to engage with stakeholders and investors.
Originality/value
This research represents one of the first attempts to explore differences between GRI and SASB using an empirical approach.
Keywords
Acknowledgements
The authors would like to express their sincere gratitude to Editor in Chief Carol Adams for her invaluable suggestions and guidance during the development of this article. Her expertise and insights have greatly enriched the content and improved its quality.
Citation
Pizzi, S., Caputo, F. and de Nuccio, E. (2024), "Do sustainability reporting standards affect analysts’ forecast accuracy?", Sustainability Accounting, Management and Policy Journal, Vol. 15 No. 2, pp. 330-354. https://doi.org/10.1108/SAMPJ-04-2023-0227
Publisher
:Emerald Publishing Limited
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