The impact of voluntary sustainability reporting on firm value: Insights from signaling theory

Friske, Wesley; Hoelscher, Seth A.; Nikolov, Atanas Nik

doi:10.1007/s11747-022-00879-2

Cited by 65 publications

(41 citation statements)

References 93 publications

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“…The investor will also increase their investment in companies that have ESG scores that meet their expectations and thereby improve the company's financial performance. This is in line with the research conducted by Friske, Hoelscher, & Nikolov (2022), ESG performance is initially a costly signal, but ultimately increases company value as companies learn how to better perform sustainability performance to stakeholders and investors learn how to evaluate that sustainability performance.…”

Section: Discussion 421 Esg Scores and Corporate Financial Performancesupporting

confidence: 73%

The Impact of ESG Scores on Corporate Financial Performance: Moderating Role of Gender Diversity

Setiani

2023

Nominal Barom. Ris. Akunt. dan Manaj.

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This study aims to examine the impact of environmental, social, and governance (ESG) scores on corporate financial performance and the moderating role of gender diversity in this relationship. This study uses 80 samples of companies listed on the Indonesian stock exchange. Samples were taken using a purposive sampling approach. The hypothesis was tested using multiple regression analysis. The results of this research show that there is a positive relationship between ESG scores and corporate financial performance. Gender diversity fosters a positive relationship between ESG scores and corporate financial performance. Investors need not only pay attention to financial aspects but also pay attention to environmental, social, and governance aspects as non-financial factors in making investment decisions.Keywords: ESG Scores, Financial Performance, Gender DiversityABSTRAKPenelitian ini bertujuan untuk menguji dampak skor environmental, social dan governance (ESG) terhadap kinerja keuangan perusahaan. Penelitian ini menggunakan 80 sampel perusahaan yang terdaftar di bursa efek Indonesia. Sampel diambil menggunakan pendekatan purposive sampling. Variabel dependen dalam penelitian ini adalah kinerja keuangan perusahaan, variabel independen adalah skor ESG, variabel pemoderasi adalah keragaman gender, dan variabel kontrol dalam penelitian ini adalah ukuran perusahaan, leverage dan growth. Hipotesis penelitian diuji menggunakan analisis regresi berganda. Hasil penelitian menunjukkan adanya hubungan yang positif antara skor ESG dan kinerja keuangan perusahaan. Keragaman gender dapat memperkuat hubungan antara ESG dan kinerja keuangan perusahaan. Investor tidak hanya perlu untuk memperhatikan aspek keuangan saja tetapi juga perlu memperhatikan aspek lingkungan, sosial dan tata kelola sebagai faktor non keuangan dalam pengambilan keputusan investasi.Kata Kunci: ESG Skor, Kinerja Keuangan, Keragaman Gender, Tata Kelola

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Section: Discussion 421 Esg Scores and Corporate Financial Performancesupporting

confidence: 73%

The Impact of ESG Scores on Corporate Financial Performance: Moderating Role of Gender Diversity

Setiani

2023

Nominal Barom. Ris. Akunt. dan Manaj.

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“…In this regard, many academics have considered the disclosure of sustainability information as a value-added activity that generates financial returns in the short and middle-long horizons (Hinze and Sump, 2019). Building on the signaling theory proposed by Akerlof (1970), an increase in transparency can enhance the quality of the estimations made by investors and financial analysts (Friske et al , 2022; Zerbini, 2017). Regarding the enabling role covered by the disclosure of additional information by companies, academics agree about a potential positive correlation between reporting practices and analysts’ forecast accuracy.…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

Do sustainability reporting standards affect analysts’ forecast accuracy?

Pizzi,

Caputo,

de Nuccio

2024

SAMPJ

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Purpose This study aims to contribute to the emerging debate about materiality with novel insights about the signaling effects related to the disclosure of environmental, social and governance (ESG) information using the guidelines released by the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). Design/methodology/approach An empirical assessment using panel data analysis was built to evaluate the relationship between sustainability reporting standards and analysts’ forecast accuracy. Findings The analysis revealed that the proliferation of sustainability reports prepared on mandatory or voluntary basis mitigated the signaling effects related to the disclosure of ESG information by companies. Furthermore, the additional analysis conducted considering sustainability reporting quality and ESG performance revealed the existence of mixed effects on analysts’ forecasts accuracy. Therefore, the insights highlighted the need to consider a cautionary approach in evaluating the contribution of ESG data to financial evaluations. Practical implications The practical implications consist of identifying criticisms related to disclosing ESG information by listed companies. In detail, the analysis underlines the need to enhance reporting standards’ interoperability to support the development of more accurate analysis by investors and financial experts. Social implications The analysis reveals increasing attention investors pay to socially responsible initiatives, confirming that financial markets consider sustainability reporting as a strategic driver to engage with stakeholders and investors. Originality/value This research represents one of the first attempts to explore differences between GRI and SASB using an empirical approach.

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“…SR is used as a signal, increasing commitment by communicating a dedication towards sustainable practices, influencing perceptions, and building credibility. (Friske et al, 2023;Bae et al, 2018) Agency theory Managers seek to maximize their benefits and act in their self-interest.…”

Section: Institutional Theorymentioning

confidence: 99%

Sustainability reporting for boosting national commitment and overcoming challenges: A hierarchical model

Paridhi,

Ritika

2024

Bus Strat Dev

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Sustainability reporting (SR) has emerged as a critical mechanism for organizations and nations to communicate their performance in terms of environmental, social, and governance (ESG). The present study investigates the challenges that prevent SR from being useful for system transparency and accountability. It identifies formidable barriers such as intentions, knowledge gaps, resource constraints, and the intricate nature of measurement metrics which necessitating a global collaborative efforts to improve SR's adaptability and acceptance within diverse systems. In addition, this pioneering research examines the factors that influence SR adoption and commitment at the national level. In the study, total interpretive structural modelling (TISM) is used to investigate the hierarchical relationship between factors while MICMAC analysis is administered to identify driver‐dependent connections. It reveals a multi‐layered structure in which macroeconomic factors such as political stability and resource availability drive regulatory effectiveness, operational factors such as administrative efficiency and awareness synergise for progress, and performance factors provide comprehensive insights into SR maturity at national level. The findings contribute significantly to the refinement of theoretical frameworks while emphasizing the importance of SR in advancing the 2030 Agenda for Sustainable Development. It emphasizes on political will, resource allocation, and tailored regulatory frameworks for comprehensive reporting of sustainability. This study provides practical insights for managers, policymakers, and businesses navigating sustainability reporting. It identifies drivers of national SR commitment and guides corporate practices towards sustainable development goals. Understanding these issues strengthens risk management and governance, while advanced measurement tools facilitate assessment and communication. Overall, it empowers stakeholders to elevate their engagement in enhancing sustainability practices, refining governance structures, and informing policy formulation.

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The impact of voluntary sustainability reporting on firm value: Insights from signaling theory

Cited by 65 publications

References 93 publications

The Impact of ESG Scores on Corporate Financial Performance: Moderating Role of Gender Diversity

The Impact of ESG Scores on Corporate Financial Performance: Moderating Role of Gender Diversity

Do sustainability reporting standards affect analysts’ forecast accuracy?

Sustainability reporting for boosting national commitment and overcoming challenges: A hierarchical model

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