Premium
The impact of sustainability reporting quality on the value relevance of corporate sustainability performance
Author(s) -
Jadoon Imran Abbas,
Ali Akhter,
Ayub Usman,
Tahir Muhammad,
Mumtaz Raheel
Publication year - 2020
Publication title -
sustainable development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.115
H-Index - 64
eISSN - 1099-1719
pISSN - 0968-0802
DOI - 10.1002/sd.2138
Subject(s) - sustainability reporting , sustainability , corporate sustainability , corporate governance , business , accounting , sustainability organizations , corporate social responsibility , relevance (law) , social sustainability , enterprise value , environmental sustainability index , finance , public relations , political science , ecology , law , biology
Abstract The value relevance of corporate sustainability performance (CSP) has been studied from different theoretical perspectives, yielding inconclusive evidence. Therefore, it is imperative to revisit corporate sustainability performance relevance for investors. This study explores the value relevance of corporate sustainability performance by studying the impact that the quality of sustainability reporting has on it. It employed the panel data of 247 firms from 2012 to 2016 for the best 30 green capital markets ranked by the Global Green Economy Index. The results indicated that investors value corporate sustainability performance (achieved through social, economic, and corporate governance dimensions only) and the quality of sustainability reporting. However, the environmental dimension of CSP lacks financial materiality for investors. Furthermore, the quality of sustainability reporting plays an instrumental role in the value relevance of the corporate governance dimension because it is perceived as an alternative corporate governance mechanism by investors. The findings are useful for practitioners, regulators, and other stakeholders interested in understanding the value relevance of corporate sustainability performance and quality of sustainability reporting.