Female Equity Analysts and Corporate Environmental and Social Performance

Surveys in both psychology and economics (Beutel and Marini 1995; Schwartz and Rubel 2005; Adams and Funk 2012) indicate that women relative to men tend to score higher on values related to community and compassion, and score lower on materialism. There is also evidence suggesting women’s prosocial and altruistic responding and preferences for redistribution and equity (Bertrand 2011). Using a novel sample of sell-side equity analysts with gender information and the Refinitiv ESG database over the period 20052021, we show that there is a positive and significant association between the number of female analysts covering a firm and that firm’s environmental and social (E&S) performance. Additional analyses using the change-on-change regressions and the instrumental variable approach suggest that the effect of female analyst coverage on firms’ E&S performance is causal. In terms of the underlying economic mechanisms, we show that female equity analysts are more likely to discuss corporate E&S issues in their analyst reports as well as are more likely to raise questions on firms’ E&S practices on earnings conference calls than their male counterparts. Moreover, we show that female equity analysts are more likely to downgrade a firm in response to negative news regarding its E&S practices than their male counterparts. We conclude that female equity analysts play a significant monitoring role in enhancing corporate E&S performance