Sustainability reporting and bank performance after financial crisis

Abstract

Purpose This study aims to examine the relationship between sustainability reporting and bank performance after financial crisis in developed and developing countries. Design/methodology/approach This study examines 882 banks from developed and developing countries covering 11 years after the 2008 financial crisis. The independent variable is environmental, social and governance (ESG) scores. The dependent variables are return on assets, return on equity and Tobin’s Q. This study uses bank- and country-specific control variables to measure the relationship between sustainability reporting and bank performance. Findings The findings deduced from the empirical results demonstrate that ESG improves banks’ accounting and market-based performance in developed countries, supporting value creation theory. Using pooling regression and instrumental variable – generalized method of moments, this study finds that ESG weakens banks’ performance in developed and developing countries. Originality/value To the best of the author’s knowledge, this is the first study to investigate and compare the impact of sustainability reporting on banks’ performance in developed and developing countries. The study found similarities in the impact of sustainability reporting and the improvement of banks’ current and future performance.

Board gender diversity and environmental, social and governance performance of US banks: moderating role of environmental, social and corporate governance controversies

“…ESG is also regarded as the fundamental strategy of corporate sustainability, and generally popular in banking institutions (McDonald and Rundle-Thiele, 2008). Effective strategic decisions to inject resources and capital to improve and achieve the commitments pertaining to ESG help banks to achieve a sound financial position, and upsurge customer loyalty (Arli and Lasmono, 2010;Buallay, 2019;Buallay et al, 2020;Shakil et al, 2019). Any negligence on ESG may harm the goodwill of the bank and question long-term sustainability.…”

Deği̇şi̇m Dönemleri̇nde Muhasebede İhti̇yatlilik Ve Sürdürülebi̇li̇rli̇k Raporlamasi: Türk Bankacilik Sektöründen Kanitlar

“…This sustainability reporting model (3) predicts that sustainability reporting reduces the demand for accounting conservatism. As we mentioned before, prior studies examine the relation between sustainability indicators such as ESG scores, CSR reports, or sustainability performance and firm performance, and they search the situation of sustainability reporting during the financial crisis (Buallay et al 2020;Garcia-Benau et al 2013;Herzig et al 2012). The impacts of sustainability reporting, sustainability disclosure, and sustainability performance on accounting conservatism are also studied by other researchers (Cheng and Kung 2016;Shawn et al 2009;Burke et al 2020;Cho et al 2020).…”

“…İdil KAYA -Destan Halit AKBULUT Muhasebe Bilim Dünyası Dergisi 2021, 23(Özel Sayı), ÖS1-ÖS23 ÖS4 This paper's second objective is to examine whether a bank's engagement in sustainability performance and reporting reduces information asymmetry and leads to less demand for conservatism by outside stakeholders. Prior studies provide evidence that companies' sustainability commitments, such as social and environmental programs, including reporting and best practices in corporate governance, improve accounting and market-based performance (Buallay et al 2020;Burke et al 2020;Garcia-Benau et al 2013;Herzig et al 2012).…”

“…improve accounting and market-based performance Buallay et al (2020). work on sustainability reporting and banking industries' financial performance from developed and emerging countries.…”

Non-Financial Disclosure Assurance: Critical Insights from the Italian Financial Services Sector

“…Banks are expected to play a pivotal role in corporate sustainability through, for example, the inclusion of environmental, social and governance criteria in their investment and lending practices (Buallay, Fadel, Alajmi, & Saudagaran, 2020). Studies in the financial services sector exploring factors influencing financial performance have highlighted the positive effects of social responsibility disclosure (Cornett, Erhemjamts, & Tehranian, 2016;Platonova, Asutay, Dixon, & Mohammad, 2018;Simpson & Kohers, 2002), corporate governance (Aebi, Sabato, & Schmid, 2012) and environmental friendliness (Jo, Kim, & Park, 2015;Nizam, Ng, Dewandaru, Nagayev, & Nkoba, 2019).…”