Materiality as a Double-Edged Sword: Real effects of SASB Sustainability Topics

55 Pages Posted: 18 Jan 2023 Last revised: 13 Nov 2023

See all articles by Max Goettsche

Max Goettsche

Catholic University of Eichstaett-Ingolstadt

Paul A. Griffin

University of California, Davis - Graduate School of Management

Florian Habermann

Catholic University of Eichstaett-Ingolstadt - Ingolstadt School of Management

Frank Schiemann

University of Bamberg

Theresa Spandel

University of Hamburg - Faculty of Business, Economics, and Social Sciences

Date Written: October 15, 2023

Abstract

We study the real effects of the identification in the materiality standards of the Sustainability Accounting Standards Board (SASB) of topics most likely to be relevant or not relevant for investors. We exploit the staggered release of the SASB materiality classifications between 2013 and 2016 as shocks to sustainability disclosure that may induce changes in sustainability performance. We measure sustainability performance by a score that is based on the number of environmental, social, and governance incidents. Our main finding is that sustainability-related incidents decrease after the release of SASB classifications indicating relevant topics for investors but, conversely, sustainability-related incidents increase for SASB classifications indicating non-relevant topics. Consistent with these changes, we also find that managers change their sustainability policies after the introduction of the SASB classifications. Additional analyses confirm that shareholder pressure amplifies these changes and that our results are significant economically. Our study has policy implications, as we demonstrate that when accounting standards emphasize topics intended to benefit investors, they can create an important downside by discouraging firms from making progress on other topics. Stakeholders affected by this lack of progress bear the negative consequences.

Keywords: Event study, SASB, materiality map, real effects, sustainability disclosure, sustainability incidents.

Suggested Citation

Goettsche, Max and Griffin, Paul A. and Habermann, Florian and Schiemann, Frank and Spandel, Theresa, Materiality as a Double-Edged Sword: Real effects of SASB Sustainability Topics (October 15, 2023). Available at SSRN: https://ssrn.com/abstract=4324667 or http://dx.doi.org/10.2139/ssrn.4324667

Max Goettsche

Catholic University of Eichstaett-Ingolstadt ( email )

Auf der Schanz 49
Ingolstadt, D-85049
Germany

Paul A. Griffin

University of California, Davis - Graduate School of Management ( email )

3102 Gallahger Hall
Davis, CA 95616
United States
(530) 752-7372 (Phone)
(425) 799-4143 (Fax)

HOME PAGE: http://www.gsm.ucdavis.edu/griffin/

Florian Habermann (Contact Author)

Catholic University of Eichstaett-Ingolstadt - Ingolstadt School of Management ( email )

Auf der Schanz 49
Ingolstadt, 85049
Germany

Frank Schiemann

University of Bamberg ( email )

Feldkirchenstr. 21
Bamberg, 96052
Germany

HOME PAGE: http://https://www.uni-bamberg.de/bwl-controlling/

Theresa Spandel

University of Hamburg - Faculty of Business, Economics, and Social Sciences ( email )

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