Corporate Philanthropy and Analyst Forecast Accuracy: Evidence from China

Abstract

Based on the perspective of market attention, this study investigates financial analysts' performance in the presence of corporate philanthropy in China. We find that the involvement of corporate philanthropy is associated with lower analyst forecast error. Additionally, our results show that the favorable effect of philanthropy on analyst forecast accuracy is stronger for firms with higher and easier information exposure in the face of engaging in corporate philanthropy. Collectively, our findings have important implications for academics and practitioners in understanding the function of corporate philanthropy in financial markets.