IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i15p6448-d1444523.html
   My bibliography  Save this article

Does Sustainability Reporting Impact Financial Performance? Evidence from the Largest Portuguese Companies

Author

Listed:
  • Sónia Monteiro

    (CICF, School of Management, Polytechnic University of Cávado and Ave (IPCA), 4750-810 Barcelos, Portugal)

  • Vanda Roque

    (UNIAG, School of Management, Polytechnic University of Cávado and Ave (IPCA), 4750-810 Barcelos, Portugal)

  • Márcia Faria

    (CICF, School of Management, Polytechnic University of Cávado and Ave (IPCA), 4750-810 Barcelos, Portugal)

Abstract

This paper aims to assess whether the financial performance of companies that publish sustainability reports (SRs) differs from the financial performance of companies that do not publish SRs, considering a sample of 297 large Portuguese companies identified by Exame magazine. We used two methodological procedures. First, we conducted a univariate analysis to test the differences in financial performance according to the disclosure of SRs. Second, we conducted a multivariate analysis using multiple linear regression to explain financial performance in relation to the disclosure of SRs. Our findings indicate that the financial performance of companies that disclose SRs does not significantly differ from the financial performance of companies that do not disclose SRs. The results are robust to both methodological procedures, as well as to the sample split by sectors. The results highlight that few companies disclose SRs, despite existing regulations (e.g., the UN 2030 Agenda, the European Non-Financial Reporting Directive, and the Corporate Sustainability Reporting Directive). This finding has significant practical implications for regulatory bodies, companies, and investors, indicating the need for more effective approaches to sustainability reporting. Policymakers should encourage companies to adopt SRs as part of a long-term strategy, acknowledging that financial benefits may accrue over time.

Suggested Citation

  • Sónia Monteiro & Vanda Roque & Márcia Faria, 2024. "Does Sustainability Reporting Impact Financial Performance? Evidence from the Largest Portuguese Companies," Sustainability, MDPI, vol. 16(15), pages 1-11, July.
  • Handle: RePEc:gam:jsusta:v:16:y:2024:i:15:p:6448-:d:1444523
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/15/6448/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/16/15/6448/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Balluchi, Federica & Lazzini, Arianna & Torelli, Riccardo, 2020. "Credibility of Environmental Issues in Non-Financial Mandatory Disclosure: Measurement and Determinants," OSF Preprints g73w5, Center for Open Science.
    2. Mariela Carvajal & Muhammad Nadeem, 2022. "Financially material sustainability reporting and firm performance in New Zealand," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 31(4), pages 938-969, April.
    3. Siwiec Karolina & Karkowska Renata, 2024. "Relationship between ESG and Financial Performance of Companies in the Central and Eastern European Region," Central European Economic Journal, Sciendo, vol. 11(58), pages 178-199, January.
    4. Roberts, Robin W., 1992. "Determinants of corporate social responsibility disclosure: An application of stakeholder theory," Accounting, Organizations and Society, Elsevier, vol. 17(6), pages 595-612, August.
    5. Manuel Branco & Lúcia Rodrigues, 2008. "Factors Influencing Social Responsibility Disclosure by Portuguese Companies," Journal of Business Ethics, Springer, vol. 83(4), pages 685-701, December.
    6. Hong Yuh Ching & Fábio Gerab & Thiago Henrique Toste, 2017. "The Quality of Sustainability Reports and Corporate Financial Performance: Evidence From Brazilian Listed Companies," SAGE Open, , vol. 7(2), pages 21582440177, June.
    7. K. Vithana & T. Soobaroyen & C. G. Ntim, 2021. "Human Resource Disclosures in UK Corporate Annual Reports: To What Extent Do These Reflect Organisational Priorities Towards Labour?," Journal of Business Ethics, Springer, vol. 169(3), pages 475-497, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Souhir Khemir, 2010. "Analyse Des Déterminants De La Divulgation Sociétale Dans Les Rapports Annuels Des Entreprises Tunisiennes Cotées," Post-Print hal-00479515, HAL.
    2. María Luisa Pajuelo Moreno & Teresa Duarte-Atoche, 2019. "Relationship between Sustainable Disclosure and Performance—An Extension of Ullmann’s Model," Sustainability, MDPI, vol. 11(16), pages 1-33, August.
    3. Filippo Vitolla & Nicola Raimo & Michele Rubino & Antonello Garzoni, 2019. "How pressure from stakeholders affects integrated reporting quality," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1591-1606, November.
    4. Tzu-Kuan Chiu & Yi-Hsin Wang, 2015. "Determinants of Social Disclosure Quality in Taiwan: An Application of Stakeholder Theory," Journal of Business Ethics, Springer, vol. 129(2), pages 379-398, June.
    5. MuiChing Chan & John Watson & David Woodliff, 2014. "Corporate Governance Quality and CSR Disclosures," Journal of Business Ethics, Springer, vol. 125(1), pages 59-73, November.
    6. Giovanna Gavana & Pietro Gottardo & Anna Maria Moisello, 2016. "Sustainability Reporting in Family Firms: A Panel Data Analysis," Sustainability, MDPI, vol. 9(1), pages 1-18, December.
    7. Muhammad Akram Naseem & Jun Lin & Ramiz ur Rehman & Muhammad Ishfaq Ahmad & Rizwan Ali, 2019. "Moderating role of financial ratios in corporate social responsibility disclosure and firm value," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-19, April.
    8. Mahadeo, Jyoti Devi & Oogarah-Hanuman, Vanisha & Soobaroyen, Teerooven, 2011. "Changes in social and environmental reporting practices in an emerging economy (2004–2007): Exploring the relevance of stakeholder and legitimacy theories," Accounting forum, Elsevier, vol. 35(3), pages 158-175.
    9. Waris Ali & Jedrzej George Frynas & Zeeshan Mahmood, 2017. "Determinants of Corporate Social Responsibility (CSR) Disclosure in Developed and Developing Countries: A Literature Review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(4), pages 273-294, July.
    10. Hasan, Mostafa Monzur & Wong, Jin Boon & Al Mamun, Mohammed Abdullah, 2022. "Oil shocks and corporate social responsibility," Energy Economics, Elsevier, vol. 107(C).
    11. Waris Ali & Jedrzej George Frynas, 2018. "The Role of Normative CSR‐Promoting Institutions in Stimulating CSR Disclosures in Developing Countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(4), pages 373-390, July.
    12. Giovanna Gavana & Pietro Gottardo & Anna Maria Moisello, 2018. "Do Customers Value CSR Disclosure? Evidence from Italian Family and Non-Family Firms," Sustainability, MDPI, vol. 10(5), pages 1-17, May.
    13. Wesley Friske & Seth A. Hoelscher & Atanas Nik Nikolov, 2023. "The impact of voluntary sustainability reporting on firm value: Insights from signaling theory," Journal of the Academy of Marketing Science, Springer, vol. 51(2), pages 372-392, March.
    14. Justyna Dyduch & Joanna Krasodomska, 2017. "Determinants of Corporate Social Responsibility Disclosure: An Empirical Study of Polish Listed Companies," Sustainability, MDPI, vol. 9(11), pages 1-24, October.
    15. Faris Nasif AL- Shubiri & Abedalfattah Zuhair Al-Abedallat & Marwan Mohammad Abu Orabi, 2012. "Financial and Non Financial Determinants of Corporate Social Responsibility," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(8), pages 1001-1012.
    16. Azlan Amran & Shiau Ping Lee & S. Susela Devi, 2014. "The Influence of Governance Structure and Strategic Corporate Social Responsibility Toward Sustainability Reporting Quality," Business Strategy and the Environment, Wiley Blackwell, vol. 23(4), pages 217-235, May.
    17. Aparna Bhatia & Megha Mahendru, 2020. "Is Institutional Environment the Only Force Behind Corporate Social Responsibility Disclosure? An Insight into Indian Companies," Indian Journal of Corporate Governance, , vol. 13(1), pages 34-62, June.
    18. Soyinka Kazeem Akanfe & Sunday Oluwafemi Michael & Adedeji Deborah Bose, 2017. "Determinant of Corporate Social Responsibility Disclosure in Nigeria," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(7), pages 565-580, July.
    19. Bonsón, Enrique & Bednárová, Michaela, 2015. "CSR reporting practices of Eurozone companies," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 18(2), pages 182-193.
    20. Ntim, Collins G., 2016. "Corporate governance, corporate health accounting, and firm value: The case of HIV/AIDS disclosures in Sub-Saharan Africa," The International Journal of Accounting, Elsevier, vol. 51(2), pages 155-216.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:15:p:6448-:d:1444523. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.