Information Content of Sustainability Reporting on Performance of Unlisted Manufacturing Firms in South Africa
Abstract
There have been conflicting arguments on whether sustainability reporting impacts on the performance of firms. This study examined the information content of sustainability reporting on the performance of non-listed manufacturing firms in South Africa. A total of five-years of audited annual reports of 70 unlisted manufacturing firms from 2014 to 2018 were used for the study. Random effect model was selected for the estimation of panel data. The study found that lagged sustainability reporting has a positive and significant impact on both current return on assets and economic value added. The implication of these results is that firms can increase the profits and value by adopting sustainability reporting. Therefore, it is recommended that the unlisted firms in South Africa should adopt sustainability reporting as a way of boosting their public image and performance.
References
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[34] Rеvеrtе, C. 2016. Cоrpоrаtе ѕоciаl rеѕpоnѕibility diѕclоѕurе аnd mаrkеt vаluаtiоn: Еvidеncе frоm Ѕpаniѕh liѕtеd firmѕ. Rеviеw оf Mаnаgеriаl Ѕciеncе, 10(2): 411–435. DOI: https://doi.org/10.1007/s11846-014-0151-7
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[2] Baboukardos, D. and Rimmel, G. 2016. Value relevance of integrated reporting disclosures: evidence from the Johannesburg Stock Exchange. Journal of Accounting and Public Policy, 35: 437-452. DOI:https://doi.org/10.1016/j.jaccpubpol.2016.04.004
[3] Barker, R. and Kasim, T. 2016. Integrated Reporting: Precursor of a Paradigm Shift in Corporate Reporting? Integrated Reporting. Palgrave Macmillan, London, 81-108. Available at https://link.springer.com/chapter/10.1057/978-1-137-55149-8_5
[4] Bird, R., Hall, A., Momente, F. and Reggiani, F. 2007. What Corporate Social Responsibility Activities are Valued by the Market? Journal of Business Ethics, 76: 189-206.
[5] Borges, M. L. et al. 2018. Corporate Social Responsibility (CSR) practices developed by Brazilian companies: an exploratory study. International Journal of Sustainable Development and World Ecology, 25(6): 509-517.
[6] Brаmmеr, Ѕ., Brооkѕ, C. and Pаvеlin, Ѕ. 2006. Cоrpоrаtе ѕоciаl pеrfоrmаncе аnd ѕtоck rеturnѕ: UK еvidеncе frоm diѕаggrеgаtе mеаѕurеѕ. Finаnciаl Mаnаgеmеnt, 35(3): 97–116.
[7] Burke, J. J. and Clark, C. E. 2016. The business case for integrated reporting: Insights from leading practitioners, regulators, and academics. Business Horizons, 59: 273-283.
[8] Carnevale, C., Giunta, F. and Cardamone, P. 2009. The Value Relevance of Social Report. The European Financial Management Association: 1-31.
[9] Chetty, S., Naidoo, R., and Seetharam, Y. 2015. The Impact of Corporate Social Responsibility on Firms’ Financial Performance in South Africa. Contemporary economics, 9(2): 193-214.
[10] de Villiers, C., Hsiao, P. C. K., and Maroun, W. 2017. Developing a conceptual model of influences around integrated reporting, new insights and directions for future research. Meditari Accountancy Research, 25(4): 450-460. DOI: http://dx.doi.org/10.1108/MEDAR-07-2017-0183
[11] Eccles, R. G., Krzus, M. P. and Ribot, S. 2015. Meaning and momentum in the integrated reporting movement. Journal of Applied Corporate Finance, 27: 8-17.
[12] Global Reporting Initiative. 2013. G4 Sustainability Reporting Guidelines: Implementation Manual Grobal Reporting Initiative. Available at: https://www2.globalreporting.org/standards/g4/Pages/default.aspx
[13] Hassel, L., Nilsson, H. and Nyquist, S. 2005. The value relevance of environmental performance. European Accounting Review, 14(1): 41– 61. DOI: https://doi.org/10.1080/0963818042000279722
[14] Hull, C.E. and Rothenberg, S. 2008. Firm performance: the interactions of corporate social performance with innovation and industry differentiation. Strategic Management Journal, 29: 781-789.
[15] Humphrey, C., O’dwyer, B. and Unerman, J. 2014. The rise of integrated reporting: understanding attempts to institutionalize a new reporting framework. 26th CSEAR Conference, University of St Andrews, 2014.
[16] Islam, M. A. and Deegan, C. 2008. Motivations for an organisation within a developing country to report social responsibility information: evidence from Bangladesh. Accounting, Auditing and Accountability Journal 21(6): 850-874. DOI: https://doi.org/10.1108/09513570810893272
[17] Iоаnnоu, I. and Ѕеrаfеim, G. 2012. Whаt drivеѕ cоrpоrаtе ѕоciаl pеrfоrmаncе? Thе rоlе оf nаtiоn-lеvеl inѕtitutiоnѕ. Jоurnаl оf Intеrnаtiоnаl Buѕinеѕѕ Ѕtudiеѕ, 43(9): 834–864.
[18] Kamatra, N. and Kartikaningdya, E. 2015. Effect Corporate Social Responsibility on Financial Performance. International Journal of Economics and Financial Issues, 5: 157-164.
[19] Maama, H. 2020. Institutional Environment and Environmental, Social and Governance Accounting among banks in West Africa. Meditari Accountancy Research, 1-19. DOI: https://doi.org/10.1108/MEDAR-02-2020-0770
[20] Maama, H. and Appiah, K.O. 2019. Green accounting practices: lesson from an emerging economy. Qualitative Research in Financial Markets, 11(4): 456-478. Available at: https://www.emeraldinsight.com/doi/pdfplus/10.1108/QRFM-02-2017-0013
[21] Maama, H. and Mkhize, M. 2020. Integrated Reporting practice in a Developing Country: Legitimacy or Stakeholder Oriented? International Journal of Disclosure and Governance, 17(4): 230-244. Available at: http://links.springernature.com/f/a/9tEmoig_IxTQoJYitI4Afw~~/AABE5gA~/RgRhNfm_P0QwaHR0cDovL3d3dy5zcHJpbmdlci5jb20vLS80L0FYUmpKbVE2RGZ4blZWYnphNXMwVwNzcGNCCgBGP8ZUXw8eXhRSFWhhcnVuYW1hYW1hQGdtYWlsLmNvbVgEAAAG5w~~
[22] Maama, H., and Mkhize, M. 2020. Integration of Non-Financial Information into Corporate Reporting: A Theoretical Perspective. Academy of Accounting and Financial Studies Journal, 24(2): 1-15. Available at: https://www.abacademies.org/articles/Integration-of-Non-Financial-Information-into-Corporate-Reporting-1528-2635-24-2-533.pdf
[23] Maama, H., Mkhize M. and Kimea, A. 2019. Institutional Investors, Corporate Governance and Firm Performance: Evidence from Emerging Economy. African Journal of Business and Economic Research 14(3): 91-109. Available at: https://journals.co.za/content/journal/10520/EJC-1881eef76e
[24] Malik, M. S., and Nadeem, M. 2014. Impact of corporate social responsibility on the financial performance of banks in Pakistan. International Letters of Social and Humanistic Sciences, 10(1): 9-19.
[25] Mensah, E., Frimpong, K. and Maama, H. 2017. Environmental Reporting Practices by Listed Manufacturing Firms: The Perspective of an Emerging Economy. Asian Journal of Economics, Business and Accounting, 2(3): 1-12.
[26] Nelling, E. and Webb, E. 2009. Corporate social responsibility and financial performance: the ‘‘virtuous circle’’ revisited”. Review of Quantitative Finance and Accounting, 32(2): 197-209.
[27] Ohlson, J. A. 1995. Earnings, Book Values, and Dividends in Equity Valuation. Contemporary Accounting Research, 11(2): 661-687.
[28] Omran, M. A., and Ramdhony, D. 2015. Theoretical perspectives on corporate social responsibility disclosure: a critical review. International Journal of Accounting and Financial Reporting, 5(2): 38-55.
[29] Pflugrath, G., Roebuck, P. and Simnett, R. 2011. Impact of assurance and assurer's professional affiliation on financial analysts' assessment of credibility of corporate social responsibility information. Auditing: A Journal of Practice and Theory, 30(3): 239-254. DOI: https://doi.org/10.2308/ajpt-10047
[30] Pillay, S. 2019. Evaluation of integrated reporting adoption in the financial sector of Kenya. African Journal of Business and Economic Research, 14: 53 –69. Available at http://web.a.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=0&sid=9595c331-aeb2-42fa-9273-50b2995702a2%40sdc-v-sessmgr01
[31] Plumlee, M., Brown, D., Hayes, R. M., and Marshall, R. S. 2015. Voluntary environmental disclosure quality and firm value: Further evidence. Journal of Accounting and Public Policy, 34(4): 336-361.
[32] Rettab, B., Brik, A.B. and Mellahi, K. 2009. A study of management perceptions of the impact of corporate social responsibility on organisational performance in emerging economies: The case of Dubai'. Journal of Business Ethics, 89(3): 371-90. Available at: www.link.springer.com/10.1007/s10551-008-0005-9
[33] Rupley, K. H., Brown, D. and Marshall, R. S. 2012. Governance, media and the quality of environmental disclosure. Journal of Accounting and Public Policy 31(6): 610-640. DOI:https://doi.org/10.1016/j.jaccpubpol.2012.09.002
[34] Rеvеrtе, C. 2016. Cоrpоrаtе ѕоciаl rеѕpоnѕibility diѕclоѕurе аnd mаrkеt vаluаtiоn: Еvidеncе frоm Ѕpаniѕh liѕtеd firmѕ. Rеviеw оf Mаnаgеriаl Ѕciеncе, 10(2): 411–435. DOI: https://doi.org/10.1007/s11846-014-0151-7
[35] Statistics South Africa. 2020. South Africa: Distribution of gross domestic product (GDP) across economic sectors from 2008 to 2018. Available at https://www.statista.com/statistics/371233/south-africa-gdp-distribution-across-economic-sectors/
[36] Tay, R. 2017. Correlation, variance inflation and multicollinearity in regression model. Journal of the Eastern Asia Society for Transportation Studies, 12: 2006-2015. Available at https://www.jstage.jst.go.jp/article/easts/12/0/12_2006/_pdf
[37] Togun, O. R. and Nasieku, T. 2015. Effect of corporate social responsibility on performance of manufacturing companies in Nigeria. International Journal of Current Advanced Research, 4(8): 228-233.
[38] van Zyl, A. S. 2013. Sustainability and integrated reporting in the South African corporate sector. International Business and Economics Research Journal, 12(8): 903-926.
[39] Wahba, H. 2008. Does the market value corporate environmental responsibility? An empirical examination. Corporate Social Responsibility and Environmental Management, 15: 89–99.
[40] Wood, D. J., and Jones, R. E. 1995. Stakeholder mismatching: A theoretical problem in empirical research on corporate social performance. The International Journal of Organization, 3 (3): 229-267.
Published
2020-12-31
How to Cite
PILLAY, Surendran; OBALADE, Adefemi A..
Information Content of Sustainability Reporting on Performance of Unlisted Manufacturing Firms in South Africa.
Journal of Environmental Management and Tourism, [S.l.], v. 11, n. 8, p. 2111 - 2120, dec. 2020.
ISSN 2068-7729.
Available at: <https://journals.aserspublishing.eu/jemt/article/view/5818>. Date accessed: 18 apr. 2024.
Section
Article
Copyright© 2023 The Author(s). Published by ASERS Publishing 2023. This is an open access article distributed under the terms of CC-BY 4.0 license.