Do Climate Risk Disclosures Matter to Financial Analysts?

Walid Ben Amar, Diana Castro Herrera () and Isabelle Martinez
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Walid Ben Amar: Unknown
Diana Castro Herrera: TSM - Toulouse School of Management Research - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse
Isabelle Martinez: TSM - Toulouse School of Management Research - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse

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Abstract: This paper examines whether and when corporate disclosures about a firm's exposure to climate risks matter to financial analysts. More specifically, we investigate the association between climate risk disclosure (CRD) and two properties of financial analysts' earnings forecasts (accuracy and dispersion). We predict that climate risk financial materiality at the industry level moderates this association. Using a sample of 2184 US nonfinancial firm-year observations over the period 2010–2016, we show that CRD is associated with higher forecast precision and lower dispersion only when climate risks are perceived by investors as being financially material at the industry level. We also find that while corporate disclosures about transition risks are not associated with financial analyst forecast properties, 10-K disclosures about climate-related material physical risks reduce analyst forecast error and dispersion.

Date: 2024-08
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Published in Journal of Business Finance and Accounting, 2024, vol.51 (n°7-8), pp.2153-2180. ⟨10.1111/jbfa.12778⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04756556

DOI: 10.1111/jbfa.12778

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