The Impact of Sustainability Disclosures on Value of Companies Following Digital Transformation Strategies

Abstract

Sustainable growth is the key global priority, and environmental, social and governance (ESG) objectives have become the main point of attention in companies' digital transformation strategies. ESG and digital transformation reinforce each other as they aim to improve efficiency and meet stakeholders inside and outside the company. This is true for telecommunication companies, where disruptive technologies such as artificial intelligence, big data or cloud computing are reshaping the industry. Assessment of the impact of sustainability disclosures on companies' value is a task of high interest for academics and practitioners from telecommunication companies. ESG disclosure serves as a key channel to inform investors about the efficiency of ESG risk management and control practices of the firm and thus can impact the firm's financial performance and market value. However, there are numerous controversies in the academic literature on this topic and a lack of research specifically for the telecommunication industry. We closed the research gaps and investigated the impact of ESG disclosure on Tobin-Q of 93 US-listed telecommunication service companies between 2011-2021. We found that aggregated ESG disclosure score positively impacted telecoms' Tobin-Q. Among individual ESG disclosure pillars, only corporate governance positively influenced Tobin-Q, while the impact of environmental and social pillars was statistically insignificant. We also found that CEO duality significantly and negatively impacted Tobin-Q. The presence of the corporate social responsibility (CSR) committee, greater gender diversity and a higher percentage of independent directors on the board positively affected the value of the telecoms. The result of the study can be applied in developing ESG rating methodologies for telecommunication companies. They can also assist telecom companies' managers and stakeholders to identify key value drivers of the ESG agenda.

Claves del Gobierno Corporativo y Sostenibilidad: Una revisión de literatura

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The Special Aspects of Devising a Methodology for Predicting Economic Indicators in the Context of Situational Response to Digital Transformation

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Boards of Directors and High-Tech Sectors Affect ESG Disclosure Quality: An Empirical Analysis of Global Firms

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