Female Equity Analysts and Corporate Environmental and Social Performance

Summary

This paper, by Kai Li and co-authors (forthcoming in Management Science), investigates whether female sell-side equity analysts monitor corporate environmental and social (E&S) performance differently from male analysts and whether those differences affect firm outcomes.

The authors hand-collect analyst gender from bios and apply an active-learning approach combined with FinBERT to classify E&S-related discussions in analyst reports and earnings-call questions. They exploit broker closures as a quasi-exogenous shock to analyst coverage to identify causal effects.

Key findings: firms with more female analyst coverage show better E&S ratings; female analysts discuss E&S topics more often and more broadly (regulation, stakeholder welfare, environment); their writing is more readable and their questions show deeper cognitive processing; they are more likely to downgrade recommendations and targets after negative E&S findings, and markets respond more strongly to their negative tones.

Key Points

Higher female analyst coverage is positively associated with firms’ E&S performance; broker closures reducing female coverage lead to declines in E&S ratings, supporting causality.
The authors develop an active-learning labelling strategy and fine-tune FinBERT to detect E&S discussion in analyst reports and earnings-call questions.
Female analysts discuss E&S issues more frequently and emphasise broad sustainability themes (regulatory compliance, stakeholder welfare, environment) compared with male analysts who focus more on narrow financial operations.
Female analysts produce more readable E&S analyses and show more sophisticated cognitive processing in questions, which likely increases the reach and impact of their research.
Female analysts more often penalise firms after negative E&S evidence (lower recommendations and targets), and markets react more strongly to their negative E&S signals—evidence that investors recognise the differential skill.
The study contributes to literature on gender and finance, analyst behaviour, and applied computational linguistics by combining active learning with a domain-tuned large language model.

Why should I read this

Quick and useful: if you care about how analyst coverage shapes corporate sustainability, this paper explains why having more female analysts seems to move the dial on E&S outcomes. The authors not only show a causal link but also tell you how female analysts do it — clearer writing, broader topic focus, and tougher follow-through. It’s a neat combo of solid identification and modern text‑analysis that saves you the legwork of sifting through dense methodology.