ESG Reporting and Analysts’ Recommendations in GCC: The Moderation Role of Royal Family Directors

Abdulsamad Alazzani, Wan Nordin Wan-Hussin, Michael Jones and Ahmed Al-hadi
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Abdulsamad Alazzani: College of Business and Economics, Qatar University, Doha 2713, Qatar
Wan Nordin Wan-Hussin: Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Kedah 06010, Malaysia
Michael Jones: School of Economics, Finance and Management, University of Bristol, Bristol BS8 1TU, UK
Ahmed Al-hadi: Faculty of Business and Law, School of Accounting, Curtin University, Perth U1987, Australia

JRFM, 2021, vol. 14, issue 2, 1-21

Abstract: This study examines whether financial analysts consider or incorporate the environmental, social and governance disclosures (thereafter ESG) in their recommendations. We then test whether royal family directors affect this relation. Using a dataset from six Gulf Cooperation Council (GCC) countries, we find evidence that analysts’ recommendations are influenced by ESG information. Further, we find the political connection negatively moderates the relationship between sell-side analysts’ recommendations and ESG. This suggests that financial analysts may assess the ESG disclosure in those firms with the political connection of royalty, in GCC countries, as superficial compliance rather than a genuine commitment. Our results are robust when subjected to endogeneity tests.

Keywords: environmental; GCC; investment recommendation; royal family directors; social and governance (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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