The Materiality of Nonfinancial Information: A Review of Theory and Empirical Evidence on Sustainability Disclosures, Corporate Social Responsibility and Responsible Investing
82 Pages Posted: 25 Sep 2015 Last revised: 3 Nov 2016
Date Written: September 01, 2016
The purpose of this study is to consolidate the existing body of knowledge on the materiality of nonfinancial information, particularly environmental, social and governance (ESG or sustainability) disclosures, by reviewing the theoretical and empirical evidence on this topic drawing from the academic literature in accounting, economics, finance, law, and management. The paper discusses the theoretical foundations of the concept of materiality and presents evidence on the changing views on the materiality of nonfinancial disclosures from the perspective of the securities and disclosure regulation in the U.S. It relates the arguments for the materiality of nonfinancial information to the stakeholder theory of the corporation. Building on the conceptual foundations the study then reviews the theoretical and empirical evidence in the management literature on corporate social responsibility, the accounting literature on sustainability disclosures and the economics and finance literature on responsible investing. This study reconciles and extracts new insights from the existing evidence in these various fields in order to inform the academic debate on the materiality of nonfinancial disclosures and to open new avenues for research.
Keywords: Materiality; nonfinancial disclosure; sustainability accounting; corporate social responsibility; responsible investing; ESG reporting
JEL Classification: A13, G11, G12, G23, H41, K22, K32, L21, M14, M41
Suggested Citation: Suggested Citation