ESG news, future cash flows, and firm value

François Derrien, Philipp Krueger, Augustin Landier, Tianhao Yao

We investigate how sell-side analysts adjust their earnings forecasts following ESG incidents. We find that following negative ESG news, analysts significantly downgrade their earnings forecasts at all horizons, including long-term. Forecast revisions account for all the negative impact of ESG incidents on firm values, implying no change in the discount rate. The negative revision of earnings forecasts reflects lower expectations on future sales (rather than higher future costs). In Europe, analysts who exhibit a stronger sensitivity to ESG news provide significantly more precise forecasts than their peers

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Year of publication:	2021
Authors:	Derrien, François ; Krüger, Philipp ; Landier, Augustin ; Yao, Tianhao
Publisher:	Geneva : Swiss Finance Institute
Subject:	ESG \| Sustainability \| Expectations \| Analyst forecasts \| Valuation \| Discount rate \| Cost of capital \| Cash flows \| Cash Flow \| Cash flow \| Finanzanalyse \| Financial analysis \| Kapitalkosten \| Unternehmenswert \| Firm value \| Prognose \| Forecast \| Unternehmensbewertung \| Firm valuation

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Extent:	1 Online-Ressource (circa 74 Seiten) Illustrationen
Series:	Research paper series / Swiss Finance Institute. - Geneva, ZDB-ID 2392286-2. - Vol. no 21, 84
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	10.2139/ssrn.3903274 [DOI]
Classification:	G32 - Financing Policy; Capital and Ownership Structure ; M14 - Corporate Culture; Social Responsibility
Source:	ECONIS - Online Catalogue of the ZBW

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