Analyst forecasts worldwide: The impact of ESG information from diverse sources and regulatory mandates

Miao Yu, Ziyao San, Dan Shi and Albert Tsang

International Review of Finance, 2025, vol. 25, issue 2

Abstract: In this study, we investigate the informativeness of the non‐financial environmental, social, and governance (ESG) information provided by various intermediaries including firms, the media, and ESG rating agencies, to financial analysts. By analyzing cross‐sectional ESG data from various sources related to 56 countries, we find that ESG information plays a crucial role in shaping analyst forecasts. More importantly, we examine the interaction between internally and externally sourced information on affecting analysts. Our results suggest that while ESG information from the media attenuates the impact of firms' ESG disclosures on reducing analysts' forecast errors and dispersion, information from ESG rating agencies increases this impact. We also find that globally implemented mandatory ESG disclosure regulations significantly increase the effect of ESG information from all three sources on analysts. In countries with a stronger stakeholder orientation, financial analysts tend to derive greater relative benefits from ESG information obtained from various sources. Overall, the findings of this study support the conclusion that both externally and internally sourced ESG information is of significant value for financial analysts, and the implementation of mandatory ESG disclosure requirements in a country increases this significance.

Date: 2025
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