Material Sustainability Information and Stock Price Informativeness

Journal of Business Ethics, Forthcoming

65 Pages Posted: 10 May 2017 Last revised: 16 Feb 2021

See all articles by Jody Grewal

Jody Grewal

Joseph L. Rotman School of Management - University of Toronto

Clarissa Hauptmann

Oxford University, Saïd Business School

George Serafeim

Harvard Business School

Date Written: January 17, 2020

Abstract

As part of the Securities and Exchange Commission’s revision of Regulation S-K, which lays out reporting requirements for publicly listed companies, 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). Firms voluntarily disclosing more SASB-identified sustainability information exhibit greater price informativeness, while the disclosure of non-SASB information does not relate to informativeness. The results are robust to a changes analysis and a difference-in-differences analysis that exploits the staggered release of SASB standards across different industries over time. We also document stronger results for firms with higher exposure to sustainability issues, poorer sustainability ratings, greater institutional and socially responsible investment fund ownership, and coverage from analysts with lower portfolio complexity.

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 (January 17, 2020). Journal of Business Ethics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2966144 or http://dx.doi.org/10.2139/ssrn.2966144

Jyothika Grewal

Joseph L. Rotman School of Management - University of Toronto ( email )

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

HOME PAGE: http://https://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Grewal

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://www.hbs.edu/faculty/Pages/profile.aspx?facId=15705

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