Publications
Publications
- November 2016
- Accounting Review
Corporate Sustainability: First Evidence on Materiality
By: Mozaffar Khan, George Serafeim and Aaron Yoon
Abstract
Using newly available materiality classifications of sustainability topics, we develop a novel dataset by hand-mapping sustainability investments classified as material for each industry into firm-specific sustainability ratings. This allows us to present new evidence on the value implications of sustainability investments. Using both calendar-time portfolio stock return regressions and firm-level panel regressions we find that firms with good ratings on material sustainability issues significantly outperform firms with poor ratings on these issues. In contrast, firms with good ratings on immaterial sustainability issues do not significantly outperform firms with poor ratings on the same issues. These results are confirmed when we analyze future changes in accounting performance. The results have implications for asset managers who have committed to the integration of sustainability factors in their capital allocation decisions.
Keywords
Sustainability; Investments; Corporate Social Responsibility; Accounting; Corporate Reporting; Regulation; Corporate Social Responsibility and Impact; Integrated Corporate Reporting; Investment; Corporate Governance
Citation
Khan, Mozaffar, George Serafeim, and Aaron Yoon. "Corporate Sustainability: First Evidence on Materiality." Accounting Review 91, no. 6 (November 2016): 1697–1724.