Sustainability disclosures and financial performance.

Abstract

Ever-increasing global competition and world shocking corporate scandals have resulted in the proliferation of environmental, social and governance issues in the commerce world. Whilst existing literature is unable to fully define the relationship between sustainability and firm performance, this research seeks to explore the association between the amount of sustainability disclosures and firm’s performance through the introduction of stakeholder’s perceptions, in terms of consumers and investors, as the potential “missing link”. A quantitative research using secondary data extracted from Wharton Research Data Service’s KLD database, Compustat database and CRSP database, as well as Brand Finance’s Global 500 Reports is conducted. Hypotheses are tested with Ordinary Least Square regressions via STATA 12 statistical tool. Results obtained proved that amount of sustainability disclosures does affect brand value, which signifies that the firm’s image and valuation can be enhance through embracing sustainability disclosures. On the other hand, the link between stakeholders’ perception and firm market performance has not been substantiated.