The impact of sustainability reporting on a company’s financial performance: Evidence from the emerging market

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Abstract

The potential impact of sustainability reporting on a company’s financial performance could be measured through its stock price, profitability, or other financial metrics. This research aims to investigate the relationship between sustainability reporting and financial performance, in order to provide insights for companies, investors, and other stakeholders on the potential benefits and drawbacks of sustainability reporting. The research community of this study is formed out of all the 13 Jordanian commercial banks listed in the Amman Stock Exchange, and covering the period from 2012–2021. The study is a census study as it involves collecting data from every member of the study population, which allows for a comprehensive analysis of the relationship between sustainability reporting and financial performance. The data was collected from publicly available sources and analyzed using multiple regression analysis. The results of the study suggest that there is a strong linear relationship between sustainability reporting and the dependent variables return on assets (ROA) and financial leverage (LEV), but the relationship between sustainability reporting (SR) and return on equity (ROE) is not statistically significant. These findings provide insights for companies, investors, and other stakeholders on the potential benefits and drawbacks of sustainability reporting and can inform decision-making around sustainability initiatives.

Keywords: Sustainability, Financial Performance, ROA, ROE, LEV, Jordan

Authors’ individual contribution: Conceptualization — O.S.S. and A.B.; Methodology — O.S.S.; Software — O.S.S.; Validation — O.S.S. and A.B.; Formal Analysis — O.S.S.; Investigation — A.B.; Resources — O.S.S. and A.B.; Data Curation — O.S.S.; Writing — Original Draft — O.S.S.; Writing — Review & Editing — O.S.S. and A.B.; Visualization — O.S.S.; Supervision — O.S.S.; Project Administration — O.S.S. and A.B.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: Q01, G30, G32, G33, G32, O55

Received: 18.04.2023
Accepted: 30.11.2023
Published online: 04.12.2023

How to cite this paper: Shaban, O. S., & Barakat, A. (2023). The impact of sustainability reporting on a company’s financial performance: Evidence from the emerging market [Special issue]. Journal of Governance & Regulation, 12(4), 306–314. https://doi.org/10.22495/jgrv12i4siart10