Does GRI compliance moderate the impact of sustainability disclosure on firm value?

Abstract

Purpose This paper aims to examine the moderating role of global reporting initiative (GRI) compliance in the association between sustainability reporting and firm value. Design/methodology/approach This study investigates a sample of 223 manufacturing firms, encompassing 11 industries from 2010 to 2019. Using GRI compliance as a moderator, the authors employed a generalized method of moments model to study how sustainability disclosure impacts firm value. Findings The results indicate a positive and significant association between sustainability disclosure and firm value. This study reveals that GRI compliance moderates the relationship between sustainability disclosure and firm value, such that firm value increases when the firm adopts GRI in sustainability reporting. Originality/value No prior studies have examined GRI compliance's direct and moderating effects on the association between sustainability disclosures and firm value in the Indian manufacturing sector. This study is also valuable for the managers and industry to understand the significance of implementing voluntary sustainability disclosure practices and being GRI compliant.

The Effect of ESG Disclosure on Firm Value: An Empirical Evidence from Chinese Listed Companies

“…The regression results demonstrate that ESG disclosure is significantly and positively related to firm value, as measured by Tobin's Q, which supports our first hypothesis which is H1：ESG disclosure has a positive effect on firm value (Tobin's Q). This finding aligns with the views of previous scholars (Aboud & Diab, 2018;Mohammad & Wasiuzzaman, 2021;Sreepriya et al, 2023) who also supported this hypothesis. And there is no relationship between ESG disclosure and firm value (ROE), contrary to our second hypothesis.…”

“…This scepticism arises from the concern that firms may use ESG information disclosure to conceal wrongdoings and highlight positive aspects of their operations. These ESG disclosures might not be independently verified, causing investors to doubt the authenticity of such information (Sreepriya et al, 2023). In a recent study Sun et al (2023), based on the Chinese context, it was found that the level of integration of ESG disclosures is negatively associated with firm value.…”

Navigating the impact: A comprehensive analysis of ESG disclosure consequences through systematic review

“…Barney (1991) Finally, institutional theory states that due to the social contract between society and business, companies must act in a manner consistent with societal requirements. Therefore, businesses engage in ESG reporting in order to comply with the implied social contract and gain legitimacy for their existence (Sreepriya et al, 2023). The institutional theory explores the relationship between firms and society, suggesting that firms are actually influenced by a wide range of external social structures, including public or private rules and organizations such as NGOs that oversee firm activities (Campbell, 2007;Dimaggio & Powell, 1983).…”

The Impact of ESG Disclosure, Liquidity, and Leverage on Firm Value Mediated by Profitability Performance

“…The sustainability performance depicted through the ESG Disclosure is becoming increasingly important in the eyes of investors due to increased investor awareness of how their funds are allocated and changes in the rules for reporting sustainability performance which were originally voluntary but now become mandatory for several industrial sectors. Research by Pulino (2022) and Sreepiya (2023), shows that there is a positive effect of ESG disclosure on company value (Pulino et al, 2022;Sreepriya et al, 2023). Meanwhile, Behl (2022) describes a negative effect, while Ihsani (2021) describes the absence of a correlation between the two variables.…”