Does Sustainability Reporting Impact Financial Performance? Evidence from the Largest Portuguese Companies

Sónia Monteiro (), Vanda Roque and Márcia Faria
Additional contact information
Sónia Monteiro: CICF, School of Management, Polytechnic University of Cávado and Ave (IPCA), 4750-810 Barcelos, Portugal
Vanda Roque: UNIAG, School of Management, Polytechnic University of Cávado and Ave (IPCA), 4750-810 Barcelos, Portugal
Márcia Faria: CICF, School of Management, Polytechnic University of Cávado and Ave (IPCA), 4750-810 Barcelos, Portugal

Sustainability, 2024, vol. 16, issue 15, 1-11

Abstract: This paper aims to assess whether the financial performance of companies that publish sustainability reports (SRs) differs from the financial performance of companies that do not publish SRs, considering a sample of 297 large Portuguese companies identified by Exame magazine. We used two methodological procedures. First, we conducted a univariate analysis to test the differences in financial performance according to the disclosure of SRs. Second, we conducted a multivariate analysis using multiple linear regression to explain financial performance in relation to the disclosure of SRs. Our findings indicate that the financial performance of companies that disclose SRs does not significantly differ from the financial performance of companies that do not disclose SRs. The results are robust to both methodological procedures, as well as to the sample split by sectors. The results highlight that few companies disclose SRs, despite existing regulations (e.g., the UN 2030 Agenda, the European Non-Financial Reporting Directive, and the Corporate Sustainability Reporting Directive). This finding has significant practical implications for regulatory bodies, companies, and investors, indicating the need for more effective approaches to sustainability reporting. Policymakers should encourage companies to adopt SRs as part of a long-term strategy, acknowledging that financial benefits may accrue over time.

Keywords: sustainability reporting; financial performance; ROA (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/15/6448/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/15/6448/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:15:p:6448-:d:1444523

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().