Corporate sustainability: First evidence on materiality

Mozaffar Khan, George Serafeim, Aaron Yoon

Research output: Contribution to journalReview articlepeer-review

139 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


  • Corporate social responsibility
  • Investment performance
  • Sustainability

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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