We examine how financial analysts respond to public information about corporate social irresponsibility (CSI) conduct. Exploiting a novel dataset on environmental, social, and governance reputational risk rating based on media coverage and analyzing a sample of 667 public corporations over an 11-year period, we find that analysts' optimistic bias tends to grow in proportion to media coverage of CSI conduct. To deal with the endogeneity issue, we propose as instrumental variable, namely, the Euclidean distance from the Canadian border. The results are robust to the use of different measures of the independent and dependent variables as well as an alternative instrumental variable approach. We also show that over-optimistic bias is larger when information asymmetries are stronger. Our findings are in line with the rational over-optimistic behavior hypothesis and have important implications for market efficiency.

中文翻译：

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媒体报道、企业社会不负责任行为和金融分析师的表现

我们研究了金融分析师如何回应有关企业社会不负责任 (CSI) 行为的公开信息。利用基于媒体报道的环境、社会和治理声誉风险评级的新数据集，并分析了 11 年期间 667 家上市公司的样本，我们发现分析师的乐观偏见往往与 CSI 的媒体报道成比例增长执行。为了解决内生性问题，我们提出作为工具变量，即与加拿大边界的欧几里德距离。结果对于使用不同的自变量和因变量测量以及替代工具变量方法是稳健的。我们还表明，当信息不对称性更强时，过度乐观的偏差更大。