Adhikari, Binay Kumar
2014-08-27
I examine the influence of sell-side financial analysts on corporate social responsibility (CSR) and find that firms with greater analyst coverage tend to be less socially responsible. To establish causality, I employ a difference-in-differences (DiD) technique, using brokerage closures and mergers as exogenous shocks to analyst coverage, as well as an instrumental variables approach. Both identification strategies suggest that analyst coverage has a negative causal effect on CSR. My findings are consistent with the view that spending on CSR is a manifestation of agency problem, and that financial analysts exert pressure on managers to cut back on such spending, which is wasteful for shareholders.
https://doi.org/10.1016/j.jcorpfin.2016.08.010
oai:zenodo.org:1220278
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Causal Effect of Analyst Following on Corporate Social Responsibility
info:eu-repo/semantics/article