The relationship between analyst coverage and corporate social responsibility

What is it about?

This study finds a positive association between the level and change of CSR engagement and the level and change of analyst coverage. This study finds that the change in CSR engagement as well as the interaction effect of changes in CSR and analyst coverage reduces the change of firm risk. Furthermore, analyst following does not significantly influence firms’ CSR strength but CSR concern activities decreases significantly as firms have more analyst followings.

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Why is it important?

Financial analysts provide indirect but additional social pressure to the firms to eventually reduce their irresponsible activities.