Analyst coverage and forecast accuracy when CSR reports improve stakeholder engagement: The Global Reporting Initiative-International Finance Corporation disclosure strategy

摘要

Aware of the information needs of stakeholders, and of the important deficiencies often present in corporate social responsibility (CSR) reports on economic, social, and environmental issues, companies leading in sustainability have initiated a new communication strategy in which their CSR reports take into account both the Global Reporting Initiative (GRI) guidelines and the International Finance Corporation (IFC) Performance Standards, in an approach termed the GRI-IFC disclosure strategy. We examine whether this innovative practice provides a better reflection of a firm's social and environmental dimensions and therefore improves the forecasts made by financial analysts, who are significant stakeholders in this respect. Our analysis of an unbalanced sample of 750 international companies, located in 19 countries and operating in 22 business sectors during the years 2011-2016, in which a logistic regression is applied to the panel data, reveals the existence of a two-way relationship between the adoption of the GRI-IFC disclosure strategy and the level of analyst coverage. Moreover, the use of this strategy, and the resulting increase in coverage, has a positive impact on the accuracy of analysts' forecasts.