Published Online:January 2025
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:IJARAP010125
DOI:10.71329/IUPJARAP/2025.24.1.7-20
Author Name:Abhishek Ranga and Rajesh Pathak
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:7-20
The paper examines the level to which environment, social and governance (ESG) disclosure is associated with the accuracy of analyst forecasts. Data of 248 Indian firms from 11 industries for 2018-2020 has been used, employing fixed effects balanced panel research design. It is found that enhanced level of ESG disclosure is related with improved analyst forecast accuracy. Moreover, the social component appears to be the most pronounced explanation for such consistent forecast accuracy. The paper provides evidence of a link between the level of governance and environmental disclosures and analyst forecast accuracy, though not as strong for social disclosure levels. The results are also supported by alternate measures of analyst forecast accuracy, proxies of ESG disclosure variables, set of idiosyncratic controls and robustness test. The paper concludes by offering evidence of usefulness of ESG disclosures as a way of evaluating investor perceptions emanating from analyst forecast accuracy. This is consistent with the notion that responsibility and sustainability reporting provides useful information to financial report users
Historically, financial reports of most companies had only provided partial information about business activities, ignoring the social and environmental impact made by an entity (Flower, 2015).