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Corporate Sustainability Performance and Financial Performance: Empirical Evidence from Japan and India

Author

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  • Najul Laskar
  • Tapan Kumar Chakraborty
  • Santi Gopal Maji

Abstract

Purpose The purpose of this article is to explore the disclosure of corporate sustainability (CS) practices and to examine the association between sustainability performance and financial performance in Asian context considering firms from India and Japan. Design/methodology/approach The present study is based on secondary data collected from annual reports and CS reports of 28 and 35 listed non-financial firms from India and Japan from 2009 to 2014. Content analysis (binary coding system) is employed to calculate the sustainability disclosure score based on Global Reporting Initiatives (GRI) framework. Market-to-book ratio is used to measure the financial performance. These scores are further used to examine the impact of CS performance on financial performance employing both the panel data model and logit regression model. Findings The study finds that the average level of disclosure is more in case of Japanese firm as compared to Indian firms. Using both the regression model, the study finds the influence of CS performance on financial performance is positive and significant for both the nations. However, the influence of CS performance is more in case of Japan than that of India. Moreover, the study also reveals that environmental factor is more dominating in influencing the financial performance in Japan. Whereas, in India, it is the social factor that dominates the financial performance. Originality/value It is the first comprehensive study in Asia analyzing the CS practices using both the panel data regression model and logit regression model.

Suggested Citation

  • Najul Laskar & Tapan Kumar Chakraborty & Santi Gopal Maji, 2017. "Corporate Sustainability Performance and Financial Performance: Empirical Evidence from Japan and India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 42(2), pages 88-106, May.
    • Handle: RePEc:sae:manlab:v:42:y:2017:i:2:p:88-106
    DOI: 10.1177/0258042X17707659
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    3. Meltem Kılıç & Hasan Emin Gurler & Ahmet Kaya & Chang Won Lee, 2022. "The Impact of Sustainability Performance on Financial Performance: Does Firm Size Matter? Evidence from Turkey and South Korea," Sustainability, MDPI, vol. 14(24), pages 1-19, December.
    4. Nagalingam Nagendrakumar & Kalubowilage Navodya Nilupulee Alwis & Udage Arachchige Kaveesha Eshani & Seekku Baduge Ushani Kaushalya, 2022. "The Impact of Sustainability Practices on the Going Concern of the Travel and Tourism Industry: Evidence from Developed and Developing Countries," Sustainability, MDPI, vol. 14(24), pages 1-21, December.
    5. Maggie Ka Ka Lee, 2019. "Effective Green Alliances: An analysis of how environmental nongovernmental organizations affect corporate sustainability programs," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(1), pages 227-237, January.
    6. Sahar E-Vahdati & Wan Nordin Wan-Hussin & Mohd Shazwan Mohd Ariffin, 2023. "The Value Relevance of ESG Practices in Japan and Malaysia: Moderating Roles of CSR Award, and Former CEO as a Board Chair," Sustainability, MDPI, vol. 15(3), pages 1-17, February.

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