Recently, the first open conference of the TRR 266 Accounting for Transparency took place at the LMU Munich. Prof. Dr. Christoph Sextroh had the opportunity to discuss a recent study by Yashu Dong (Shanghai University of Finance and Economics), Siyi He (Sichuan University), Ole-Kristian Hope (University of Toronto) and Di Tang (Shanghai University of Finance and Economics) on “The Dual Roles of Analysts in Shaping Green Investment Strategies”. The study examines how financial analysts influence companies' environmental investment decisions simultaneously through two conflicting roles: On the one hand, as facilitating the flow of relevant information to the market; on the other hand, as transmitters of short-term market pressures to the firm.

Using detailed data from Chinese listed companies with strong environmental regulations, the study documents that while analyst reporting can encourage capital-intensive environmental investments such as plant modernization and green corporate acquisitions, it also discourages other, more uncertain and costly actions such as investments in green innovation. The results suggest a nuanced influence of analysts on corporate sustainability efforts.

Photo: Nadine Stegemann