Abstract

Corporate Social Responsibility (CSR) has become increasingly important for managers, investors, regulators, and other external stakeholders worldwide. I investigate how the disclosure of CSR activities is associated with the precision of the common and private information in analysts’ forecasts based on the Barron-Kim-Lim-Stevens (BKLS) model. Using an international sample of firms from 31 countries over the period 2008-2020 and measures of CSR disclosure from Bloomberg, I find that CSR disclosure is negatively and significantly associated with the precision of public information and positively and significantly associated with that of private information in analysts' forecasts. In crosssectional analyses, I find that the relation between CSR disclosure and analysts’ information environment is more pronounced in stakeholder-oriented governance mechanisms and when the information environment is poorer. This study extends the literature by showing that analysts rationally use more private than public information associated with CSR information.

Keywords: Financial analysts, CSR disclosure, BKLS model, Stakeholder-oriented governance, Information environment