The impact of CSR-engagement, board gender, and stock price synchronicity on female analyst stock coverage decisions

TY - JOUR

T1 - The impact of CSR-engagement, board gender, and stock price synchronicity on female analyst stock coverage decisions

AU - McGuinness, Paul B.

AU - Vieito, João Paulo

AU - Wang, Mingzhu

N1 - Publisher Copyright: © 2024 Elsevier B.V.

PY - 2024/12

Y1 - 2024/12

N2 - The present study investigates the impact of a target entity’s corporate social responsibility (CSR) credentials, board diversity, and stock return synchronicity on analyst coverage decisions. Based on more than 33,000 stock recommendations on UK listed companies, we significantly deepen and extend the relevant literature (Kumar, 2010; Li et al, 2013; and Li et al., 2024) in several important ways. We find female analysts are more likely than male analysts to impound CSR information into stock coverage decisions for entities with intermediate recommendations. For firms with more extreme economic prospects. i.e., at strong buy and sell levels, the positive effect of CSR performance on female analyst coverage weakens. After controlling for the CSR characteristics of a stock, results suggest female analysts are more likely to cover firms with gender-inclusive boards. Results accord with a narrative emphasizing female analysts’ weaker access to firms with less gender-inclusive boards. Our account adds new context and application to the emerging corporate finance literature on gender-based homophily. Finally, we report limited difference in the stock return synchronicity of firms covered by male and female analysts.

AB - The present study investigates the impact of a target entity’s corporate social responsibility (CSR) credentials, board diversity, and stock return synchronicity on analyst coverage decisions. Based on more than 33,000 stock recommendations on UK listed companies, we significantly deepen and extend the relevant literature (Kumar, 2010; Li et al, 2013; and Li et al., 2024) in several important ways. We find female analysts are more likely than male analysts to impound CSR information into stock coverage decisions for entities with intermediate recommendations. For firms with more extreme economic prospects. i.e., at strong buy and sell levels, the positive effect of CSR performance on female analyst coverage weakens. After controlling for the CSR characteristics of a stock, results suggest female analysts are more likely to cover firms with gender-inclusive boards. Results accord with a narrative emphasizing female analysts’ weaker access to firms with less gender-inclusive boards. Our account adds new context and application to the emerging corporate finance literature on gender-based homophily. Finally, we report limited difference in the stock return synchronicity of firms covered by male and female analysts.

KW - Analyst gender

KW - Corporate social responsibility

KW - Gender-inclusivity

KW - Stock coverage

KW - Stock price synchronicity

KW - UK listed firms

UR - http://www.scopus.com/inward/record.url?scp=85209359288&partnerID=8YFLogxK

U2 - 10.1016/j.jfs.2024.101344

DO - 10.1016/j.jfs.2024.101344

M3 - Article

AN - SCOPUS:85209359288

SN - 1572-3089

VL - 75

JO - Journal of Financial Stability

JF - Journal of Financial Stability

M1 - 101344

ER -