Non-financial disclosure and financial performance: the consequences of the EU Non-Financial Reporting Directive in Italy

Michela Cordazzo, Laura Bini and Giuseppe Marzo

International Journal of Business Governance and Ethics, 2026, vol. 20, issue 2, 167-189

Abstract: The EU NFR Directive makes the NFD mandatory for the European largest listed firms. The paper offers an empirical analysis of the association between NFD and FP over the application of the Directive in Italy, testing the reverse causality between NFD and FP. We find a positive relationship from FP to NFD, but no evidence of a reverse relationship from NFD to FP. Furthermore, our results show a moderate impact of the Directive on NFD, as the Directive allows firms providing only a minimum amount of NFD or any information. Our study makes two main contributions. First, it contributes to the debate on the regulation of NFD. Second, it widens the scope of other studies on the relationship between NFD and FP, as it offers theoretical and empirical arguments on the relationship between NFD and FP over the transition from a voluntary to a mandatory disclosure setting.

Keywords: ESG; EU directive; non-financial disclosure; financial performance; reverse causality. (search for similar items in EconPapers)
Date: 2026
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