The development of companies in a sustainable manner is a desire of both company’s management and regulators who make sustained efforts to develop and standardize non-financial reporting. In the ...context in which the new European Directive regarding sustainability requires companies to report in accordance with the mandatory standards of sustainable reporting of the EU, including an external assurance of sustainability reporting that is necessary, the present research aims to analyze the perception of professional practitioners, members of the Chamber of Financial Auditors of Romania (C.F.A.R.) regarding the challenges and opportunities of implementing the European Directive on Corporate Sustainability Reporting. The main objective is to identify the main areas of concern regarding the efforts to train auditors in carrying out assurance missions related to non-financial situations, considering the new European Directive on non-financial reporting and, respectively, the adjacent developments carried out by the IASB and EFRAG in the sphere of the standardization of non-financial reporting. The present research proposes an analysis of the associations between the main defining elements of the auditor's capabilities (technological factor, human factor, audit processes) and, respectively, the defining elements of the auditor's profile outlined under the legislative framework, governmental monitoring and control mechanisms or the characteristics the economic environment, which influences the audit opinion. The main results obtained underline the fact that auditors are not yet prepared to provide assurance services in relation to sustainability reports, both from the perspective of defining and implementing robust audit processes, and from the perspective of the low degree of adequacy of the audit systems used or from the perspective of human factor knowledge and skills gaps. So, this reality confirms a state of fact that must concern professional bodies and, at the same time, governmental bodies in terms of the degree of involvement in auditor training activities and, respectively, the promotion of professional guidelines.
Reporting is a method for businesses to communicate with their various stakeholders. While the factors contributing to sustainability reporting and disclosure have been thoroughly investigated, the ...findings are inconclusive. Similarly, the non-financial reporting literature is disclosed of operational and non-operational activities related to ecological as well as social disclosure of firm. However, in recent years, stakeholders have increased their demand for green innovation practices (GIPs) to be included as a new component of ecological reporting. Thus, companies' proactivity in adopting green innovation reporting is reflected (GIR). This research propounds enhancing transparency in sustainability reporting by including corporations' GIPs, which will increase the transparency level of firm operations and instil greater stakeholder confidence. To accomplish this study, the legitimacy and signalling theories were used as an environmental solution.
Additionally, an exhaustive assessment of the literature was conducted in order to develop a GIR framework for enterprises to use when integrating GIPs into sustainability reporting. The outcome of this study indicates that current sustainability reporting takes a minimalist approach, with GIR being presented superficially. This non-financial reporting approach does not accurately reflect a company's genuine GIPs or the environmental effect of existing business operations. As such, this study calls for the integration of GIR into firms' sustainability reporting to accurately reflect their actual firm sustainable practices.
Purpose The purpose of this study is to analyse the impact of corporate attributes like a company’s profitability, size, age, leverage and board size on companies’ sustainability reporting as ...measured through India’s new business responsibility and sustainability reporting (BRSR) framework. Design/methodology/approach A random sample of 130 companies was taken from the top 1,000 listed companies on the National Stock Exchange. Sequential mixed methods research approach was used to prepare a sustainability quality index. Then, a hierarchical multiple regression analysis was performed to examine the impact on the quality of reporting by Indian companies. Findings Interestingly, the analysis revealed that traditional metrics like age, profitability, board size and leverage did not have significant associations with reporting quality. Rather, the size of a company in terms of market capitalisation was found to have a strong positive impact on sustainability reporting. Research limitations/implications This was a cross-sectional study, as time series data for BRSR reporting is not yet available. Also, only five parameters were taken for analysis. Lastly, subjective judgment in content analysis may be involved. Practical implications This suggests that only larger companies in India are prioritising sustainability reporting over smaller ones. It affirms the legitimacy and stakeholder theory in the Indian context. Originality/value To the best of the authors’ knowledge, this study is one of the first endeavours to assess the efficacy of the new Indian BRSR framework and test its primary objectives. Furthermore, significant implications have been given for managers to catalyse and reinforce the sustainability momentum down the lane across companies of all sizes in India.
The purpose of the paper is to study the impact of corporate sustainability practices on the financial performance of companies included in the BIST Sustainability 25 Index. To assess the efficiency ...and quality of corporate sustainability, general (ESG Disclosure Index) and partial (Environmental Disclosure Index, Social Disclosure Index, and Corporate Governance Disclosure Index) indices were used, calculated based on content analysis of sustainability reports. Based on the two given types of indices and four types of financial performance indicators (return on assets, return on equity, assets turnover ratio, and Tobin’s Q), two types of regression models (GEN models and PART models) were built, and eight analytical models were examined. Company size and leverage were included as control variables in each model. The regression analysis results were contradictory, partially confirming the conclusions of some scientists and refuting the findings of others. A study of GEN models revealed that companies implementing more effective general corporate sustainability practices have a significant positive impact only on return on equity; as for other measures (return on assets, assets turnover ratio, and Tobin’s Q), an insignificant relationship between them and ESG Disclosure Index was found. Results of the PART models analysis revealed a significant positive effect of the Social Disclosure Index on return on equity and assets turnover ratio and a negative relationship between the Corporate Governance Disclosure Index and assets turnover ratio. Using control variables for the two types of models showed a significant negative effect of company size on Tobin’s Q. AcknowledgmentThis study was supported by the Ministry of Education and Culture of Ukraine within the project “Development of a mechanism for the sustainable development of economic systems in the conditions of military operations and post-war recovery of the economy” (Registration number of the project: 0124U000463).
The financial performance of a company whose operating activity has a significant social impact on the environment is influenced by the sustainable reporting of these two indicators, for investors ...that manifest interest, whose orientation involves sustainable development, being a new economic concept. This research aims to highlight how sustainable reporting has a direct impact on an entity’s performance, by quantifying the environmental variable and the social variable in a scoring matrix, by assigning values based on the completeness of reporting the data found in the reports of 8 entities in the field of energy and the exploitation and transportation of natural gas and oil listed in category I on the Bucharest Stock Exchange, regarding the programs undertaken, the approvals obtained or the quality standards to which they aligned. The research results are based on correlation and regression econometric calculations to identify the correlations between the score variable and financial performance.
(1) Background: The article provides a methodologically coherent analysis of technological development in the context of the fourth industrial revolution or Industry 4.0 and its impact on changes in ...sustainable development policy. (2) Methods: Using a Comparative Automated Content Analysis (ACA) approach, the article compares recent scientific work on sustainable development and the fourth industrial revolution with the discourse in the news media on sustainable development and industry 4.0. (3) Results: The scientific literature focuses more on changes in business models, production processes, and technologies that enable sustainable development. Newspaper and magazine articles write more about sustainable or green investments, sustainable standards, and sustainable reporting. The focus is on topics that are directly relevant to current sustainable business development and the promotion of research and development of clean and smart technologies and processes. (4) Conclusions: The ACA allows a more systematic comparison of different data sources. The article provides a starting point for sustainable development professionals to gain useful insights into a specific context with the help of the ACA.
Companies are very important contributors to the long-term sustainable wealth of economies and society. Public companies are likely to be especially important for economic, environmental, and social ...development. That is why we focus on initial public offerings (IPO). Responsible external reporting relates to the long-term value of companies and influences perceptions of value by stakeholders. This study contributes to the literature not only because it concentrates on earning quality in terms of going public, but it also combines it with another market puzzle, namely, long-term value. Previous conclusions for other markets should not simply be generalized for Poland, as the country has been an emerging market with many public firms controlled by insiders, with a limited role for the equity market and quite considerable bank financing. Using a unique dataset, we find positive and significant discretionary accruals in the IPO year, which may be perceived as a sign of poor earning quality. We also show that these accruals are negatively correlated with subsequent long-term market value for IPOs made before the financial crisis. The general conclusions are robust with respect to the latest innovations in proxies for earnings management, and also to a variety of alternative specifications.
PurposeWith the emergence of the basis of intellectual capital, competitive advantage was considered as the focus of competitive strategies, and the knowledge resulting from this approach became the ...basis for the development and strategic directions of companies in various fields of the company such as finance and accounting. The purpose of this study is sustainable intellectual capital reporting framework and evaluation of key examples in the context of capital market companies.Design/methodology/approachThe methodology of this study was exploratory from the point of view of the developmental result and based on the type of objective and qualitative and quantitative basis was used to collect the data. The statistical population in the qualitative part was university experts and in the quantitative part financial managers of capital market companies. Data collection tools were interviews in the qualitative part and fuzzy scales and language comparison checklists in the quantitative part. Therefore, first through three stages of coding, the dimensions of the model were identified, and based on the fuzzy Delphi analysis, the reliability level was determined through the average between the first round and the second round of Delphi. Finally, through the default tests, the appropriate fuzzy model was first determined, and then hierarchical fuzzy analysis based on TODIM's approach was used to determine the most favorable axis of sustainable intellectual capital reporting.FindingsThe results in the qualitative part indicate the existence of 3 categories and 6 components and 39 conceptual themes in the form of a six-dimensional model. In the quantitative part, the results showed that by confirming the dimensions identified through fuzzy Delphi analysis, the most desirable axis of intellectual capital reporting is the component of technological capital reporting, which can play a more effective role in sustainable reporting.Originality/valueThis study, relying on the importance of the consequences of sustainable intellectual capital reporting, tries to evaluate the consequences of this field of financial reporting due to the lack of a coherent theoretical framework about capital market companies. In addition, the framework presented in this study promotes integrated thinking for firms to it would provide some level of incentive to those charged with governance concerning the voluntary compliance with the sustainable intellectual capital reporting framework.
Purpose
The purpose of this paper is to test if building reputation capital through environmental, social and governance (ESG) investing can mitigate the negative effect of economic policy ...uncertainty (EPU) on firms’ valuation.
Design/methodology/approach
This study uses an unbalanced panel of 591 financial firms between 2005 and 2021 from Canada, France, Germany, Italy, Japan, the United Kingdom (UK) and the USA. Ordinary least square method is used in the empirical tests. To alleviate a potential endogeneity problem, robustness tests are performed using the two-stage least square approach with instrumental variables.
Findings
The results of this paper show that sustainable reporting can offset the negative effect of EPU on the valuation of financial firms. Consistent with the stakeholder-based reputation-building hypothesis, sustainability performance may have an insurance-like impact on firms’ valuation during periods of high uncertainty.
Practical implications
According to the findings, during high policy uncertainty periods, investors accept to pay a premium for the stocks of the firms which built social capital through environmental and social investments. Accordingly, it is suggested that regulatory bodies and governments motivate firms to increase their stakeholder orientation to attain higher reputation capital.
Social implications
Managers can mitigate the negative impact of policy uncertainty on the value of their firms via building social capital, which will increase financial market stability in return, and portfolio investors may use such firms for portfolio optimization decisions.
Originality/value
To the best of the authors’ knowledge, this paper is one of the first to examine the mitigating role of ESG investing on EPU and firm valuation relationships for financial firms. Thus, this study provides new insights related to the impact of ESG performance on valuation during uncertain times.
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