Materiality Indications as a Double-Edged Sword: Real Effects of Sustainability Disclosure Standards

56 Pages Posted: 18 Jan 2023 Last revised: 25 Apr 2023

See all articles by Max Goettsche

Max Goettsche

Catholic University of Eichstaett-Ingolstadt

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: March 31, 2023

Abstract

We examine the environmental, social, and governance (ESG) real effects in response to the publication of the Sustainability Accounting Standards Board (SASB) standards through changes in US firms’ ESG incidents. The implemented event study design exploits the staggered release of the SASB standards between 2013 and 2016 and captures post-publication changes in ESG incidents via RepRisk data. According to SASB sector-specific materiality classifications, the RepRisk incident score is divided into financially material and financially immaterial components. Our results indicate that firms significantly reduce their financially material ESG incidents after SASB standard publications, especially when facing shareholder pressure. Simultaneously, we document a significant increase in financially immaterial ESG incidents in the post-publication period, which implies that firms shift their attention and resources from ESG issues classified as financially immaterial to material issues. As such, our findings indicate that the publication of disclosure standards can, irrespective of firms’ adoption decision, trigger real effects, which are beneficial to certain stakeholder groups while potentially imposing costs on other stakeholders. Our study’s insights into these double-edged effects of sustainability standards complement the emerging field of research at the nexus of sustainability disclosure standards and real effects.

Keywords: SASB, Materiality, ESG incidents, Real effects, Event study

Suggested Citation

Goettsche, Max and Habermann, Florian and Schiemann, Frank and Spandel, Theresa, Materiality Indications as a Double-Edged Sword: Real Effects of Sustainability Disclosure Standards (March 31, 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

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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