The Accounting Review· 2016Q1
Corporate Sustainability: First Evidence on Materiality
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- Q1SCImago
- 2016year
Short summary
Firms with strong sustainability ratings on material issues significantly outperform those with poor ratings, while ratings on immaterial issues show no significant performance difference.
AI-generated from the title and abstract; the full text is not read.
Key points
- Developed a novel dataset by hand-mapping material sustainability topics to firm-specific ratings.
- Firms with good ratings on material sustainability issues significantly outperform firms with poor ratings.
- Firms with good ratings on immaterial sustainability issues do not significantly outperform firms with poor ratings.
- Results are confirmed by analyzing future changes in accounting performance.
AI-generated from the title and abstract; the full text is not read.
Abstract
ABSTRACT Using newly available materiality classifications of sustainability topics, we develop a novel dataset by hand-mapping sustainability investments classified as material for each industry into firm-specific sustainability ratings. This allows us to present new evidence on the value implications of sustainability investments. Using both calendar-time portfolio stock return regressions and firm-level panel regressions, we find that firms with good ratings on material sustainability issues significantly outperform firms with poor ratings on these issues. In contrast, firms with good ratings on immaterial sustainability issues do not significantly outperform firms with poor ratings on the same issues. These results are confirmed when we analyze future changes in accounting performance. The results have implications for asset managers who have committed to the integration of sustainability factors in their capital allocation decisions.
The authors' abstract, as published at the source. The Accounting Review, 2016 · DOI ↗
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Field: Strategy and Management
Strategy and ManagementBusiness, Management and Accounting