The Relationship between Corporate Sustainability Disclosure and Firm Financial Performance in Johannesburg Stock Exchange (JSE) Listed Mining Companies

Abstract

Whether corporate sustainability disclosure (CSD) affects profitability remains indistinct to many firms. This paper examines the relationship between corporate sustainability disclosure and return on investment. The sample of this study consisted of ten Johannesburg Stock Exchange (JSE)-listed mining companies, and the data was extracted from sustainability reports for a period of five years from 2010 to 2014. In this regard, data collection was undertaken by the adoption of a content analysis approach. A multi-regression analysis was used to analyze the relationship between environmental disclosure and return on investment. The same statistical mechanism was employed to determine the association involving social disclosure and return on investment. Results show that there is a negative relationship between environmental disclosure and return on investment. On the other hand, the research reveals that there is also a positive association between social disclosure and return on investment. This implies that an increase in corporate reporting of social issues results in heightened financial performance through an increase in return on investment. This study recommends the adoption of corporate social disclosure as it will encourage firms to be socially responsible, while also generating financial benefits. Further studies can be conducted about the change from voluntary corporate social disclosure to mandatory disclosure.

The association between sustainability disclosures and the financial performance of Jordanian firms

“…This suggests that the overall sustainability disclosure in the Jordanian context is acceptable, especially when compared with other developing contexts. For example, sustainability disclosure is reported as around 10 per cent in Malaysia, 9 per cent in South Africa and 5 per cent in Pakistan (Ur Rehman et al, 2020;Wasara & Ganda, 2019). While the disclosure percentages of firms listed on the ASE are not categorised as "poor disclosure", some disclosure indicators are reported at minimal level.…”

“…To sum up, increasing sustainability disclosures is seen as a commitment to the suggested contract between firms and their surrounding environment (Choi et al, 2013). Consequently, firms must utilise the available resources in an effective way to achieve the goals of society without destroying stakeholders' social expectations (Wasara & Ganda, 2019). Under the legitimacy theory, firms may adjust their policies and strategies to guarantee acceptance by society.…”

Components of Countries’ Regulative Dimensions and Voluntary Carbon Disclosures

“…Highly leveraged firms will be more likely to participate in voluntary carbon disclosures [61]. Furthermore, leveraged companies tend to provide high-quality environmental information in order to keep their investors and creditors informed, thereby avoiding higher costs of capital and improving their financial flexibility [6,13,62]. In this sense, it is expected that firms with higher leverage ratios will be more likely to voluntarily disclose environment-related information, as well as to report high-quality information [4].…”

Rethinking the Way of Doing Business: A Reframe of Management Structures for Developing Corporate Sustainability

“…Sustainability report should be a "snapshot" of the company's activities, however, its credibility has been questioned due to the widespread use of biased languages and the omission of data and negative aspects towards obtaining a positive image in the market [109][110][111]. Disclosure of information about CS is voluntary in many countries and, therefore, many companies do not follow formal rules or regulations on the form and content of disclosure [111].…”