Corporate Social Responsibility and the Value of Analysts' Recommendations

• In Event: Financial Accounting and Reporting 4

Abstract

The purpose of this study is to examine the relationship between corporate social responsibility and the value of financial analysts' stock recommendation revisions. We find that the value of stock recommendations for socially responsible companies is lower than for non-socially responsible companies. Also, we show that as a firm with the more information about social responsibility KLD strengths and concerns, the value of financial analysts' stock recommendations decreases.
Furthermore, when we focus on the sensitiveness of change of KLD score, our result indicates that the value of stock recommendations is negatively associated with firms' improvement on KLD score. Also, as a firm experiences the more change in social responsibility strengths and concerns, the value of analysts' stock recommendations decreases. Our results imply that the value of recommendation is the function of firms' CSR rating and the amount of information on KLD strengths and concerns.

Authors

• Changhee Lee, Rutgers Business School

• Dan Palmon, Rutgers Business School