The impact of CSR-engagement, board gender, and stock price synchronicity on female analyst stock coverage decisions

Abstract

The present study investigates the impact of a target entity’s corporate social responsibility (CSR) credentials, board diversity, and stock return synchronicity on analyst coverage decisions. Based on more than 33,000 stock recommendations on UK listed companies, we significantly deepen and extend the relevant literature (Kumar, 2010; Li et al, 2013; and Li et al., 2024) in several important ways. We find female analysts are more likely than male analysts to impound CSR information into stock coverage decisions for entities with intermediate recommendations. For firms with more extreme economic prospects. i.e., at strong buy and sell levels, the positive effect of CSR performance on female analyst coverage weakens. After controlling for the CSR characteristics of a stock, results suggest female analysts are more likely to cover firms with gender-inclusive boards. Results accord with a narrative emphasizing female analysts’ weaker access to firms with less gender-inclusive boards. Our account adds new context and application to the emerging corporate finance literature on gender-based homophily. Finally, we report limited difference in the stock return synchronicity of firms covered by male and female analysts.