Climate Risk Disclosure and Financial Analysts’ Forecasts: Evidence from China

Yaoyao Liu and Jie Han ()
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Yaoyao Liu: School of Economics and Management, China University of Petroleum (East China), Qingdao 266580, China
Jie Han: School of Business, Qingdao University of Technology, Qingdao 266520, China

Sustainability, 2025, vol. 17, issue 7, 1-23

Abstract: This study examines whether climate risk disclosure (CRD) matters to financial analysts in China. Using textual analysis to measure CRD, we find that CRD is negatively related to analyst forecast error and dispersion, supporting the information hypothesis . We also find that information disclosure quality (e.g., earnings quality) and external monitoring (e.g., long-term institutional investor) may moderate this relationship. Mechanism analysis indicates that lower information asymmetry and more climate-related on-site visits are potential channels through which CRD influences analyst forecast properties. Furthermore, the above relationship is more pronounced in regions with higher climate awareness, carbon-intensive industries, and state-owned enterprises, and the relationship is primarily driven by transition risk disclosure (TCRD) rather than physical risk disclosure (PCRD). Our findings, which remain valid after addressing various robustness and endogeneity concerns, have significant implications for regulators to standardize and enhance CRD practices.

Keywords: climate risk disclosure (CRD); analyst forecast error; analyst forecast dispersion; information asymmetry; climate-related on-site visit (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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