Impact of Corporate Sustainability Reporting Practice on Corporate Performance: A Review of Literature

Abstract

Stakeholder pressure on corporations to adopt sustainable practice has been a subject steering constant argument in recent times. The reason could be due to the awareness of the environmental impact and concern in preserving the planet. This study, through a literature review of prior studies, examined the impact of corporate sustainability reporting practice on corporate performance. Numerous researchers investigated this relationship in the past, but there is still a lack of consensus with regards to outcomes. Findings have been inconsistent and contradictory, varying from positive to a negative relationship, to statistically insignificant or mixed outcomes dependent on several factors such as cost exceeding benefits, shareholders perceiving sustainability initiative as a cost object, investors not valuing disclosure, firms using disclosure as legitimization tool for prestige, weak legislation, proxies used for measurement tool, country/ region of study, methodology, the period covered, industry sector covered and/or sample size. Our study reviewed 35 works of literature and found 13 studies with positive outcomes, 8 with significant negative outcomes, 5 with no significant relationship and 9 with mixed result. Overall, we concluded that it pays for corporations to adopt sustainable business practices as the benefit of adoption will span across the long term. Not denying the fact that companies would incur some huge costs in the short run at the time of investment, but the long-run benefits would far outweigh whatever cost they might have incurred. Hence, corporations are advised to start incorporating the sustainable practice into the management process and subsequently report on them to avoid legitimacy cost and to gain long-run competitive advantage. Future studies may conduct a systematic review to disaggregate the approaches, so as to examine the different dimensions of sustainability practice and provide a more concise and clear result.

An empirical study of sustainability reporting assurance: current trends and new insights

“…Using data from 12,783 companies globally from 1999 to 2017, this study provides an exploratory overview of the market and the practices of sustainability assurance around the world, adding to the literature reviews in this area, which have emphasised advances in research (Cohen and Simnett, 2014; Gillet-Monjarret and Rivière-Giordano, 2017; Gold and Taib, 2020; Maroun, 2018). The study concentrates on emerging trends from 2012, given the rise in the mandatory issuance of stand-alone sustainability reports by companies that emerged during this period.…”

The Influence of Financial Behaviour on Financial Risk Tolerance In Investment Decision: A Conceptual Paper

“…From this study, investment firms will benefit from the insights provided on ways to avoid behavioural biases in making decisions for investments, then deal with risk in investment. This is due to the various challenges in the investment industry to be encountered in order to enhance high-quality financial performance and business outcomes, such as job opportunities and economic growth (Gold & Taib, 2020;Wang et al, 2020;Al-sakkaf et al, 2020). In this study, FRT is examined as the possible product of financial behaviour in investment decision-making.…”