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International Journal of Law and Management: Consequences of corporate sustainability reporting: evidence from an emerging market
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Abstract
Purpose – The purpose of this paper is to discover whether corporate sustainability disclosure has a
potential impact on the market value and earnings quality of firms in an emerging market.
Design/methodology/approach – The data were collected from 220 companies listed in the Colombo
Stock Exchange (CSE) in Sri Lanka during the period 2012-2016. Firm value proxies by Tobin’s Q, while
earnings quality proxies by discretionary accruals (DAC). The study is premised on value-enhancing theory
for firm value and transparent financial reporting perspective for earnings quality. Regression analyses are
executed on the panel data to achieve the study objectives.
Findings – The results reveal a positive relationship between sustainability reporting (SR) and firm market
value, accepting the value-enhancing theory while rejecting the value-destroying theory. This finding
suggests that investors pay a premium in the financial markets for firms that perform in an environmentally
and socially responsible manner, compared to firms that do not perform in a similar manner. In the same vein,
the results reveal that sustainability disclosure and DAC are negatively and significantly associated, resulting
in high-quality earnings. The result is consistent with the transparent financial reporting hypothesis, which is
also in line with the managers’ integrity motivation.
Originality/value – This is the first study investigating the consequences of SR that is specific to the Sri
Lankan context. Owing to the sparse studies on consequences of SR, this study contributes significantly to the
extant literature by broadening the geographical coverage to include a developing country setting.
RMNC Swarnapali - Personal Name
NONE
Text
ENGLISH
EMERALD INSIGHT
2020
ENGLAND
JURNAL ILMU HUKUM
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APA Citation
RMNC Swarnapali. (2020).International Journal of Law and Management:
Consequences of corporate
sustainability reporting: evidence
from an emerging market.(Electronic Thesis or Dissertation). Retrieved from https://localhost/etd