Corporate sustainability: First evidence on materiality

Mozaffar Khan, George Serafeim, Aaron Yoon

Research output: Contribution to journalReview articlepeer-review

471 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)1697-1724
Number of pages28
JournalAccounting Review
Issue number6
StatePublished - Nov 2016

Bibliographical note

Funding Information:
We are grateful for comments from seminar participants at National University of Singapore, the 2015 Annual Conference of the Alliance for Research on Corporate Sustainability, Harvard Business School, Oxford University, and from staff members of the Sustainability Accounting Standards Board (SASB). We are grateful for financial support from the Division of Faculty Research and Development at Harvard Business School. George Serafeim has served on the Standards Council of SASB. The views expressed in this paper are those of the author and do not reflect an official position of the SASB.

Publisher Copyright:
© 2016, American Accounting Association. All rights reserved.


  • Corporate social responsibility
  • Investment performance
  • Sustainability


Dive into the research topics of 'Corporate sustainability: First evidence on materiality'. Together they form a unique fingerprint.

Cite this