Financial Analysts, Firm Quality, and Social Responsibility
Titel:
Financial Analysts, Firm Quality, and Social Responsibility
Auteur:
Jo, Hoje
Verschenen in:
Journal of behavioral finance
Paginering:
Jaargang 4 (2003) nr. 3 pagina's 172-183
Jaar:
2003-09-01
Inhoud:
We suggest that financial analysts have an incentive to follow the stocks of socially responsible companies, because such stocks meet the growing demands and psychology of the investment community, who want to combine the usual investment goals with social responsibility. Socially responsible investors prefer to hold stocks of companies they perceive as socially responsible or of high quality. Financial analysts then help brokers' marketing efforts by supplying investors with more analysis for stocks of socially responsible or high-quality companies. Using scores from Fortune surveys on perceptions of community and environmental responsibility as a measure of social responsibility and Fortune survey measures of quality as a measure of company quality, we find evidence that stocks of socially responsible and high-quality companies are indeed followed by more financial analysts. The positive relationship among social responsibility, company quality, and analyst following remains significant even after controlling for the effects on analyst following of firm size, share price, the volatility of stock returns, and market-to-book value of equity.
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