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Air pollution and analyst information production

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  • Li, Chao Kevin
  • Luo, Jin-hui
  • Soderstrom, Naomi S.

Abstract

Recent studies investigate the impact of air pollution on labor productivity. We extend this literature by showing that air pollution negatively affects equity analyst information production. Analysts exposed to air pollution are less likely to issue timely forecasts or improve their forecast accuracy. Investigating the underlying mechanism, we find that analysts exposed to air pollution are less likely to provide bold (especially, negatively bold) forecasts. We also find evidence that market pricing is less sensitive to forecast revisions issued by analysts exposed to air pollution. Our results are robust to controlling for firm/analyst and time fixed effects, as well as additional specifications employing difference-in-differences designs and placebo tests.

Suggested Citation

  • Li, Chao Kevin & Luo, Jin-hui & Soderstrom, Naomi S., 2020. "Air pollution and analyst information production," Journal of Corporate Finance, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:corfin:v:60:y:2020:i:c:s0929119919300239
    DOI: 10.1016/j.jcorpfin.2019.101536
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    7. Wang, Jie & Wang, Wanwan & Yuan, Fang, 2023. "Air pollution and corporate risk-taking: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 570-586.
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    10. Jiang, Dequan & Li, Weiping & Shen, Yongjian & Zhang, Ying, 2022. "Does air quality affect firms’ investment efficiency? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 1-17.
    11. Zhang, Ping & Wang, Yiru, 2023. "The bright side of analyst coverage on corporate innovation: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).

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