Nonfinancial disclosure and analyst forecast accuracy: Evidences from CO2 emission and corporate social responsibility disclosures in the US

We examine the association with analyst forecast quality of both CO2 emission disclosure and corporate social reporting for a sample of large US firms. Using a matched sample we find, for a one, two and three-year horizons, a significant reduction in error, bias and forecast dispersion and a significant improvement of the analysts’ information environment for those firms that disclose CO2 emissions. However, we confirm a significant negative association between corporate social responsibility reporting and forecast error only for a one-year horizon and bias for a one and two-year horizon. Previous work had demonstrated a significant negative association between forecast error and CSR disclosure for an international sample but not for the US. Our results suggest nonfinancial disclosure is relevant even in a liberal market economy with transparent financial reporting.