Corporate ESG performance and the capital market’s information environment: evidence from analysts’ forecasts

The role of ESG is not confined to investments, but extends to the influence it exerts on capital markets. This study investigates the impact of corporate ESG performance on the information environment. Our results show that as companies demonstrate higher ESG performance, there is a significant increase in analyst coverage, an enhancement in the accuracy of public information, and a reduction in the precision of private information. Further analysis reveals that the impact of ESG performance on the capital market information environment is significantly higher in state-owned companies, non-heavily polluting industries, and the eastern regions. This study not only examines the economic consequences of corporate ESG performance from the perspective of the capital market’s information environment, but also provides practical guidelines for policymakers and professionals in finance and sustainability to optimize the capital market environment through the development of corporate ESG.