Is the Swedish Equity Analyst Just an ESG Salesperson?

Sammanfattning: This thesis aims to understand if Swedish sell-side equity analysts evaluate firms' ESG performance and whether they recognize ESG performance as a factor that creates firm value. Data is collected for Swedish companies currently listed on the Stockholm Stock Exchange (Mic: XSTO) for the years 2008-2022. To test the hypotheses several OLS regressions are performed. The results show that the relationship between ESG performance and stock price potential is significantly positive. This suggests that financial analysts recognize a premium for companies that are more committed to ESG transparency, which is consistent with both theory and previous research outside the Swedish context. The results hold even when considering alternative model specifications. Furthermore, the results also show that the potential stock price gains from improved ESG performance decrease over time, due to ESG being priced in the market.