ESG 중요성 공시의 유용성

This study emphasizes the importance of materiality in ESG disclosures. Measuring the materiality, we rely on Bloomberg data on the firm-specific sustainability indicators mapped with the industry-specific indicators identified by SASB. Our main results are as follows: First, the stock market investors respond to the ESG news (i.e., the change in ESG activities) to a greater extent when the corresponding disclosure becomes more material. Second, we report the apparent upward drift of stock returns subsequent to the announcement of the material ESG news, suggesting that investors do not fully understand but underestimate the value relevance of the material information. Finally, we find that ESG activities tend to be more persistent if they are more material. Combined, our results indicate that material ESG disclosures are more likely to persist over time, and hence more value relevant. We extend the literature with a context based on disclosure materiality. This study presents the first empirical evidence on the importance of disclosure based on materiality in Korean capital market. Our results suggest that corporate managers need to allocate resources to ESG activities based on materiality. Our results also have important policy implications when ISSB demands sustainability disclosures based on materiality.