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Do more readable sustainability reports provide more value-relevant information to shareholders?

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Listed:
  • Ahn, Minkwan
  • Jung, Doowon
  • Kim, Jeong-Taek
  • Lee, Woo-Jong
  • Sunwoo, Hee-Yeon

Abstract

Whether sustainability reports provide value-relevant information to shareholders is a question of pressing importance to policymakers, regulators, and standard setters. Extending prior studies on information content in sustainability reports, we present evidence that the report form also matters. Using Korean listed firms for the periods 2010 to 2020, we find that more readable sustainability reports tend to provide more firm-specific information in the financial market. Our findings call for structured regulatory guidelines and active engagement of corporate stakeholders for effective delivery in sustainability reporting.

Suggested Citation

  • Ahn, Minkwan & Jung, Doowon & Kim, Jeong-Taek & Lee, Woo-Jong & Sunwoo, Hee-Yeon, 2023. "Do more readable sustainability reports provide more value-relevant information to shareholders?," Finance Research Letters, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005263
    DOI: 10.1016/j.frl.2023.104154
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    References listed on IDEAS

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    1. Jody Grewal & Clarissa Hauptmann & George Serafeim, 2021. "Material Sustainability Information and Stock Price Informativeness," Journal of Business Ethics, Springer, vol. 171(3), pages 513-544, July.
    2. Yen†Jung Lee, 2012. "The Effect of Quarterly Report Readability on Information Efficiency of Stock Prices," Contemporary Accounting Research, John Wiley & Sons, vol. 29(4), pages 1137-1170, December.
    3. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    4. Gus De Franco & Ole†Kristian Hope & Dushyantkumar Vyas & Yibin Zhou, 2015. "Analyst Report Readability," Contemporary Accounting Research, John Wiley & Sons, vol. 32(1), pages 76-104, March.
    5. Shuili Du & Kun Yu, 2021. "Do Corporate Social Responsibility Reports Convey Value Relevant Information? Evidence from Report Readability and Tone," Journal of Business Ethics, Springer, vol. 172(2), pages 253-274, August.
    6. Li, Feng, 2008. "Annual report readability, current earnings, and earnings persistence," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 221-247, August.
    7. Bernard S. Black & Hasung Jang & Woochan Kim, 2006. "Does Corporate Governance Predict Firms' Market Values? Evidence from Korea," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(2), pages 366-413, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Metelytsia, Volodymyr, 2023. "Sustainability reporting as a tool for attracting investments for the green reconstruction of Ukraine's agibusiness," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 3, pages 78-83.

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    More about this item

    Keywords

    Sustainability reports; Report readability; Stock price synchronicity; Firm-specific information;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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