Sustainability Disclosure, Dominant Owners and Earnings Informativeness

Sánchez, Carolina Bona; Alemán, Jerónimo Pérez; Martín, Domingo Javier Santana

doi:10.2139/ssrn.2485450

Cited by 5 publications

(26 citation statements)

References 59 publications

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“…Therefore, accounting earnings may not be able to capture the true value of the firm and at that juncture, financial information will be less informative. Hence, firms that disseminate sustainability and related information liberally will be more worthwhile to market participants who wish to evaluate such firms (Bona-Sánchez et al, 2017).…”

Section: Sustainability Disclosurementioning

confidence: 99%

“…As declared by Lassoued et al (2017), "there is a consensus that managers use earnings management (EM) opportunistically for their own private benefits rather than for the interest of shareholders" (p. 1117). Accordingly, financial reporting and SD association assumed to be substitutive (Bona-Sánchez et al, 2017;Prior et al, 2008). Consistent with this notion, Lang and Lundholm (1993) also point out a substitutive association between voluntary disclosure and earnings quality, while Muttakin et al (2015) stated a substitutive relationship amid CSR disclosure and earnings quality.…”

Section: Introductionmentioning

confidence: 95%

“…Given this backdrop, the present study intends to find out whether the communication through SD has an effect on the EI of firms in an emerging market. The literature attests that communication through social and environmental disclosures provide additional information to market participants to better assess EI (Bona-Sánchez et al, 2017;Chen et al, 2002;Kim et al, 2012;Riahi-Belkaoui, 2015). In addition, social and environmental disclosures contribute to reduce the uncertainty (risk) faced by market participants, by assisting them to interpret the financial information more accurately (Bona-Sánchez et al, 2017;Francis et al, 2008).…”

Section: Introductionmentioning

confidence: 99%

“…Thus, CSR disclosures and EI are assumed to be positively associated. As a reading of the academic literature shows, although the significance of sustainability information is mounting, satisfactory corroboration of the true benefits of SD, mainly the extent (or the degree) to which providing information relating to sustainability may influence stockholders' perceptions, has not been properly established, as a reading of the academic literature shows (Bona-Sánchez et al, 2017). This is mainly due to firms have not yet fully understood the value-relevance of information along with the way stakeholders react to sustainability and other social information disclosures (Moser and Martin, 2012).…”

Section: Introductionmentioning

confidence: 99%

“…Further, Sri Lankan companies have had a traditionally greater understanding of the impact of socio-environmental issues on their businesses from the early days as a result of the country's religious and cultural ethos. To the best of the researcher's knowledge, except for the seminal effort carried out by Bona-Sánchez et al (2017), no other researchers have made an effort to investigate the influence that SD exerts over EI. Moreover, insufficient attention has been paid to the consequences of CSR disclosures made in the emerging capital markets, in particular the Asia-Pacific economies, including Sri Lanka.…”

Section: Introductionmentioning

confidence: 99%

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Sustainability disclosure and earnings informativeness: evidence from Sri Lanka

Swarnapali

2019

AJAR

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Purpose The purpose of this paper is to investigate whether the communication that takes place through the sustainability disclosure (SD) route has an effect on earnings informativeness (EI) of firms in an emerging market. Design/methodology/approach The sample consists of companies listed on the Colombo Stock Exchange in Sri Lanka, where SD is a new phenomenon and a voluntary reporting initiative. Regression analysis is executed on the panel data to achieve the study objective. Findings The result reveals a positive association between SD and EI. Sustainability reports may provide useful information that supplements merely financial data, aiding the stakeholders to interpret the financial reporting better. The finding premises that SD enhances EI, communicating value relevant information to capital market participants. Practical implications SD does much to reduce capital market participants’ uncertainties, thereby aiding them to assess financial information better. Social implications The findings of the study confirm earlier research findings that indicate a positive association between SD and EI, suggesting that capital market participants are gradually becoming aware of the value relevance of sustainability reports. Originality/value This is the first study investigating SD and EI association that is specific to the Sri Lankan context. Owing to the sparse studies done on the SD and EI association, this study should contribute significantly to the existing literature by broadening the geographical coverage.

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Section: Sustainability Disclosurementioning

confidence: 99%

Section: Introductionmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Sustainability disclosure and earnings informativeness: evidence from Sri Lanka

Swarnapali

2019

AJAR

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The Effect of Quantity and Quality Sustainability Disclosure Towards Innate and Discretionary Earnings Quality

Septiani

Yuyetta

2020

E3S Web Conf.

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Examining the effect of quantity and quality of sustainability disclosure on innate and discretionary earnings quality is the purpose of this research. the GRI G4 index was used to measure The sustainability disclosure quantity, while the report form, the adherence level and external statements was used to measure the quality of sustainability disclosure. A modified Jones Model uses to measure Innate and discretionary earnings quality as the dependent variable. Return on assets, leverage, net operating assets, and operating cycle were used as control variables. The research sample consisted of 10 main sector companies, namely the agriculture and mining sub-sectors, which are listed in the Indonesia Stock Exchange in 2014-2018. purposive sampling method was used in this research. The technique of analysis in this research is multiple linear regression analysis. As results, innate earnings quality was significantly influenced by sustainability disclosure quantity while discretionary earnings quality was not significantly influenced by sustainability disclosure quantity. Moreover, both innate earnings quality and discretionary earnings quality was significanty influenced by the quality of sustainability disclosure.

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Corporate sustainability performance and informativeness of earnings

Saini

Feng

DeMello

2021

AJB

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PurposeWith the growing awareness about the environment and climate, sustainability has gained increased attention of investors. Many investors now factor in the long-term sustainability of successful and responsible companies when making their investment choices. The purpose of this paper is to investigate whether or not the sustainability performance of a company affects the informativeness of its earnings by exploring the mediating effect of sustainability performance on the association between stock returns and earnings changes.Design/methodology/approachUsing a sample of firms for the period 2009–2016 with available sustainability data from TruValue Labs' database, the authors investigate how the sustainability performance of a firm mediates the relationship between stock returns and earnings (changes). The authors use ordinary least squares (OLS) regressions to test their hypotheses.FindingsConsistent with the voluntary disclosure and environmental, social and governance (ESG) performance literature, the authors find that higher sustainability performance improves the stock price informativeness of earnings. The authors find evidence in support of increased earnings response coefficient with increased sustainability performance.Research limitations/implicationsThis study adds to the literature supporting the notion of sustainability investing indicating that sustainability performance of a firm affects the stock price informativeness and predictability of earnings (changes) of the firm.Originality/valueThis study has value for, both, investors and managers regarding the importance of sustainability performance of the firm. Sustainability performance of the firm sends signals to market participants, increasing the informational content of the reported earnings as well as predictability of future earnings.

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Sustainability Disclosure, Dominant Owners and Earnings Informativeness

Cited by 5 publications

References 59 publications

Sustainability disclosure and earnings informativeness: evidence from Sri Lanka

Sustainability disclosure and earnings informativeness: evidence from Sri Lanka

The Effect of Quantity and Quality Sustainability Disclosure Towards Innate and Discretionary Earnings Quality

Corporate sustainability performance and informativeness of earnings

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