Material Sustainability Information and Stock Price Informativeness

Journal of Business Ethics, Forthcoming

55 Pages Posted: 10 May 2017 Last revised: 30 Jan 2020

See all articles by Jody Grewal

Jody Grewal

University of Toronto

Clarissa Hauptmann

Oxford University, Saïd Business School

George Serafeim

Harvard Business School

Date Written: November 28, 2017


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

JEL Classification: G12, G14, G2, M1, M2, M4

Suggested Citation

Grewal, Jyothika and Hauptmann, Clarissa and Serafeim, George, Material Sustainability Information and Stock Price Informativeness (November 28, 2017). Journal of Business Ethics, Forthcoming, Available at SSRN: or

Jyothika Grewal

University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5J 2Z6
6172060366 (Phone)

HOME PAGE: http://

Clarissa Hauptmann

Oxford University, Saïd Business School ( email )

Park End St
Oxford, OX1 1HP
United Kingdom

George Serafeim (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

HOME PAGE: http://

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