• norsk
    • English
  • English 
    • norsk
    • English
  • Login
View Item 
  •   Home
  • Norges Handelshøyskole
  • Thesis
  • Master Thesis
  • View Item
  •   Home
  • Norges Handelshøyskole
  • Thesis
  • Master Thesis
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

Is Materiality Key to Profit on Sustainability? An empirical analysis of material sustainability and its effect on stock performance on Oslo Stock Exchange

Baklund, Caroline Brusdal; Østby, Ida Emilie
Master thesis
Thumbnail
View/Open
masterthesis.pdf (3.574Mb)
URI
https://hdl.handle.net/11250/3050369
Date
2022
Metadata
Show full item record
Collections
  • Master Thesis [4657]
Abstract
In this thesis, we examine whether the companies’ focus and prioritization of material

sustainability issues have value implications for companies listed in Norway. Material

sustainability issues are those issues that are likely to influence the decision making of

stakeholders (Jørgensen, Mjøs, & Pedersen, 2022). We classify an investment as material or

immaterial by cross-checking MSCI’s key sustainability issues with SASB’s industry-specific

material issues. We construct portfolios based on i) companies with high (low) investments in

material and immaterial sustainability, and ii) based on relative sustainability performance. The

excess returns are then measured against the Fama French four-factor model. The methodology is

inspired by Khan, Serafeim & Yoon (2016).

When considering sustainability investments, we find that no significant abnormal returns are

present, regardless of the investments being material or immaterial. When examining the effect of

relative sustainability performance on stock performance, our results indicate that the relative

material sustainability performance does not create value for shareholders. However, the results

implies that a strong performance on immaterial sustainability is associated with a negative

annualized abnormal return of 1.2% compared to the low performers. Furthermore, we argue that the

five biggest sectors on Oslo Stock Exchange are affected differently by sustainability factors,

because of varying stakeholder pressure and different material issues. The sector portfolios

achieve a difference in annualized abnormal return ranging from -2.40% for the Extractives &

Mineral Processing sector to 3.60% for the Financial sector. To conclude, we argue that materiality

matters in the sense that continuous investments in immateriality, and thus becoming a

sector-leader, is value-destroying. The results suggests that the non- financial accounting

standards used in Norway are successful in separating material and immaterial issues for

investments purposes, and thereby highlight the importance of knowing which sustainability issues

to prioritize in the mission of aligning sustainability and profitability.

Contact Us | Send Feedback

Privacy policy
DSpace software copyright © 2002-2019  DuraSpace

Service from  Unit
 

 

Browse

ArchiveCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsDocument TypesJournalsThis CollectionBy Issue DateAuthorsTitlesSubjectsDocument TypesJournals

My Account

Login

Statistics

View Usage Statistics

Contact Us | Send Feedback

Privacy policy
DSpace software copyright © 2002-2019  DuraSpace

Service from  Unit