Effect of environmental, social and governance performance on the financial reporting lag of Saudi listed companies

Hamid Ghazi H Sulimany ()
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Hamid Ghazi H Sulimany: Accounting Department, Business Administration College, Taif University

Palgrave Communications, 2025, vol. 12, issue 1, 1-8

Abstract: Abstract The empirical literature has documented evidence concerning the relationship between financial performance and financial reporting lag. Currently, rating agencies and other stakeholders are paying considerable attention to the impact of business organizations on sustainable practices for performance assessment. However, less attention has been paid to the impact of nonfinancial performance on financial reporting lag. Therefore, the main objective of this research is to explore the influence of environmental, social and governance performance (ESG) on firms’ financial reporting lag. A total of 126 firms in the Saudi stock market from 2015 to 2023 were sampled. The data generated were analyzed using pooled OLS and fixed effects analytical techniques. It was found that Saudi firms’ financial reporting lag may decrease as their ESG performance increases, supporting stakeholder and signaling theories. The findings remain consistent when several econometric models and specifications are used. The outcomes imply that ESG performance is a crucial determinant of financial reporting quality. These findings may be beneficial for regulators, auditors and managers. Specifically, they may encourage auditors and regulators to focus on ESG reporting when discharging their oversight duties to increase accountability and raise investor confidence. Additionally, they may stimulate firms to enhance their ESG initiatives for the timely disclosure of financial statements, thus enhancing managerial efficiency.

Date: 2025
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DOI: 10.1057/s41599-025-05709-8

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