Impact of sustainability reporting initiatives on the financial performance of Philippine listed companies

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Concerns for the environment and sustainability require entities to contribute to societal development toward sustainable advancement. There is also an increasing demand for high-quality and reliable reports on sustainability-related matters. The study aims to highlight the impact of sustainability reporting initiatives on financial performance through the GRI reporting framework and four determinants of financial performance – return on assets (ROA), return on equity (ROE), and basic and diluted earnings per share (EPS). Conducting random effects generalized least square (GLS) regression, this paper examines 127 firm-year observations from 47 Philippine listed entities covering 2019–2021. The results show a significant negative relationship between the total sustainability reporting initiative index score and financial performance, represented by return on equity (coefficient = –0.4690, z-value = –1.68). Moreover, there is a positive significant relationship between economic reporting and financial performance, particularly return on assets, basic earnings per share, and diluted earnings per share (coefficients = 0.1590, 12.6200, 12.6500; z-values = 3.11, 1.72, 1.73). A negative significant relationship exists between social reporting and financial performance, particularly return on equity and basic and diluted earnings per share (coefficients = –0.5530, –14.1600, –14.1400; z-values = –2.04, –2.65, –2.65). This study pioneers an investigation into the nascent implementation of Securities and Exchange Commission (SEC) sustainability reporting and the implications of sustainability initiatives on corporate performance in the Philippines. The results shed light on the dynamics of sustainability initiatives and financial outcomes to encourage firms to harmonize economic success with environmental preservation and societal advancement toward value creation.

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    • Figure 1. Average annual Sustainability Index scores of Philippine listed firms
    • Table 1. Sample selection
    • Table 2. Descriptive statistics
    • Table 3. Pearson correlation
    • Table 4. Panel regression results on ROA
    • Table 5. Panel regression results on ROE
    • Table 6. Panel regression results on BEPS
    • Table 7. Panel regression results on DEPS
    • Table 8. Full model regression on all proxies of financial performance
    • Table A1. Variable definition
    • Table B1. Global Reporting Initiative (GRI) disclosure content indexes
    • Conceptualization
      Kevin Troy Chua, Hae-Young Byun
    • Data curation
      Kevin Troy Chua
    • Formal Analysis
      Kevin Troy Chua, Hae-Young Byun
    • Investigation
      Kevin Troy Chua, Hae-Young Byun
    • Methodology
      Kevin Troy Chua, Hae-Young Byun
    • Project administration
      Kevin Troy Chua, Hae-Young Byun
    • Resources
      Kevin Troy Chua
    • Software
      Kevin Troy Chua, Hae-Young Byun
    • Validation
      Kevin Troy Chua, Hae-Young Byun
    • Visualization
      Kevin Troy Chua
    • Writing – original draft
      Kevin Troy Chua, Hae-Young Byun
    • Writing – review & editing
      Kevin Troy Chua, Hae-Young Byun
    • Funding acquisition
      Hae-Young Byun
    • Supervision
      Hae-Young Byun