Jody Grewal - Faculty & Research - Harvard Business School
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Jody Grewal

Doctoral Student

Jody is a doctoral candidate in the Accounting & Management unit at Harvard Business School. Her research interests include nonfinancial reporting, disclosure regulation, and target-setting.

Jody has worked as an accountant and consultant, as well as a researcher for sustainability reporting standards. Jody earned a Bachelor of Accounting and Finance and a Master of Accounting from the University of Waterloo in Ontario, Canada.
Journal Articles
  1. Market Reaction to Mandatory Nonfinancial Disclosure

    Jody Grewal, Edward J. Riedl and George Serafeim

    We examine the equity market reaction to events associated with the passage of a directive in the European Union (EU) mandating increased nonfinancial disclosure. These disclosures relate to firms’ environmental, social, and governance (ESG) performance and would be applicable to firms listed on EU exchanges or with significant operations in the EU. We predict and find (i) an on average negative market reaction, (ii) a less negative market reaction for firms having higher pre-directive nonfinancial performance, and (iii) a less negative reaction for firms having higher pre-directive nonfinancial disclosure levels. Results are accentuated for firms having the most material ESG issues, as well as investors anticipating proprietary and political costs as a result of the mandated disclosures. Overall, the results are consistent with the equity market perceiving that this disclosure regulation of nonfinancial information would lead to net costs (benefits) for firms with weak (strong) nonfinancial performance and disclosure.

    Keywords: nonfinancial information; nonfinancial performance; ESG; "ESG (environmental, social, governance) performance; investor behavior; disclosure; disclosure regulation; regulation; sustainability; corporate governance; Corporate performance; Information; Corporate Disclosure; Governing Rules, Regulations, and Reforms; Performance; Environmental Sustainability; Corporate Governance; Outcome or Result;


    Grewal, Jody, Edward J. Riedl, and George Serafeim. "Market Reaction to Mandatory Nonfinancial Disclosure." Management Science (forthcoming).  View Details
Working Papers
  1. Material Sustainability Information and Stock Price Informativeness

    Jody Grewal, Clarissa Hauptmann and George Serafeim

    As part of the SEC’s revision of Regulation S-K, many investors proposed the mandatory disclosure of sustainability information in the form of environmental, social, and governance (ESG) data. However, progress is contingent on collecting evidence regarding which sustainability disclosures are financially material. To inform this issue, we examine materiality standards developed by the Sustainability Accounting Standards Board (SASB). We find firms voluntarily disclosing more SASB-identified sustainability information have higher stock price informativeness. In contrast, sustainability disclosures not identified as material by SASB are not associated with informativeness. Our result is robust to including controls for sustainability performance ratings, analyst forecasts, insider trading, institutional ownership, earnings quality, and other voluntary disclosure activity. Changes in material sustainability disclosure are followed by changes in stock price informativeness. Differences-in-differences estimates suggest that following the release of SASB standards, the treatment group of firms increased SASB-identified sustainability disclosure relative to the control group of firms and that the treatment group experienced an increase in stock price informativeness. The results are stronger for firms with higher exposure to sustainability issues, greater institutional and socially responsible investment fund ownership, and coverage from analysts with lower portfolio complexity. Moreover, we document intra-industry information transfers to firms with low SASB-identified sustainability disclosure in industries where firms have higher SASB-identified sustainability disclosure.

    Keywords: Voluntary Disclosure; accounting standards; sustainability; nonfinancial information; corporate social responsibility; stock price informativeness; synchronicity; Environmental Sustainability; Corporate Disclosure; Corporate Accountability; Stocks; Price; Corporate Social Responsibility and Impact; Accounting; Standards;


    Grewal, Jody, Clarissa Hauptmann, and George Serafeim. "Material Sustainability Information and Stock Price Informativeness." Harvard Business School Working Paper, No. 17-098, May 2017. (Revised November 2017.)  View Details
  2. Shareholder Activism on Sustainability Issues

    Jody Grewal, George Serafeim and Aaron Yoon

    Shareholder activism on sustainability issues has become increasingly prevalent over the years, with the number of proposals filed doubling from 1999 to 2013. We use recent innovations in accounting standard setting to classify 2,665 shareholder proposals that address environmental, social, and governance (ESG) issues as financially material or immaterial, and we analyze how proposals on material versus immaterial issues affect firms’ subsequent ESG performance and market valuation. We find that 58% of the shareholder proposals in our sample are filed on immaterial issues. We document that filing shareholder proposals is effective at improving the performance of the company on the focal ESG issue, even though such proposals nearly never received majority support. Improvements occur across both material and immaterial issues. Proposals on immaterial issues are associated with subsequent declines in firm valuation while proposals on material issues are associated with subsequent increases in firm value. We show that companies increase performance on immaterial issues because of agency problems, low awareness of the materiality of ESG issues, and attempts to divert attention from poor performance on material issues.

    Keywords: sustainability; activism; Activist Investors; Activist shareholder; corporate social responsibility; corporate accountability; environment; Corporate performance; corporate governance; Corporate Accountability; Corporate Social Responsibility and Impact; Performance; Environmental Sustainability; Corporate Governance; Business and Shareholder Relations; Investment Activism;


    Grewal, Jody, George Serafeim, and Aaron Yoon. "Shareholder Activism on Sustainability Issues." Harvard Business School Working Paper, No. 17-003, July 2016.  View Details
Cases and Teaching Materials
  1. ESG Metrics: Reshaping Capitalism?

    George Serafeim and Jody Grewal

    In the past twenty-five years, the world had seen an exponential growth in the number of companies reporting environmental, social and governance (ESG) data. Investor interest in ESG data also grew rapidly. A growing belief that increasing levels of social inequality and natural environment degradation were pressing problems that the capitalist system was failing to resolve had led many stakeholders to advocate for changes in measurement and corporate reporting as a potentially powerful “lever” that could move the discussion from “Reimagining” to “Reshaping” Capitalism. Some suggested that increased transparency could change corporate behavior, increase corporate accountability and lead to better outcomes for employees, customers, the environment and local communities. Others suggested that ESG data were value relevant from an investor standpoint and that firms “doing good would do well.” According to this view, investors that used ESG data would be able to make better investment decisions and widespread disclosure of such data would improve market efficiency. However, some commentators doubted the sincerity of company ESG disclosures and suggested that firms that did good were less competitive, and therefore earned lower returns for their shareholders. As the business community entered the second half of the second decade of the twenty first century, whether the widespread adoption of ESG metrics would happen -- and whether, if it did, it would lead to systematic change -- was very much an open question.

    Keywords: Capitalism; sustainability; accounting; accountability; corporate accountability; corporate social responsibility; Responsibilities to Society; environment; social impact investment; ESG; Measurement and Metrics; Corporate Social Responsibility and Impact; Integrated Corporate Reporting;


    Serafeim, George, and Jody Grewal. "ESG Metrics: Reshaping Capitalism?" Harvard Business School Technical Note 116-037, March 2016.  View Details