Contemporary Accounting Research Vol. 43 No. 2 2026
The Value of Values: Does Focusing on Sustainability Provide a Competitive Advantage in Forecasting Earnings?
Abstract
We identify sustainability‐focused analysts using recent advances in machine learning combined with conference call transcripts. Sustainability‐focused analysts issue more accurate earnings forecasts, and the stock market reacts more strongly to their revisions. The forecasting advantage of sustainability‐focused analysts is amplified for material sustainability issues, small firms, and growth firms. Consistent with a learning curve in understanding how sustainability issues relate to future performance, we find that less experienced analysts are less likely to focus on sustainability and that they reap fewer benefits in forecast accuracy when they do so. Our results suggest that far from being an inefficient use of time and resources, focusing on sustainability provides a competitive advantage in one of the most pivotal steps in valuation: forecasting earnings.
- DOI
- 10.1111/1911-3846.70031
- Volume
- 43
- Issue
- 2
- Pages
- 779-816
- Language
- en
- Sources
- openalex crossref