Nexus between Sustainability Reporting Disclosure and Financial Performance: A Comprehensive Analysis of Saudi Arabia's Manufacturing Industry

Maha Faisal Alsayegh

Sustainable Business and Society in Emerging Economies, 2025, vol. 7, issue 1, 25-38

Abstract: Purpose: The aim of the present work is to investigate the link that exists between the sustainability reporting and financial performance of Saudi Arabia’s manufacturing sector. Concretely, it examines the impact that sustainability disclosure has on Return on Assets (ROA), Return on Equity (ROE), and Financial Leverage (FL).Design/Methodology/Approach: The study employs panel data collected from fifty manufacturing companies operating in the Tadawul Stock Exchange from year 2019 to year 2023. By applying CA method, sustainability-reporting scores obtained from GRI ratios. To measure the effects of sustainability reporting on financial performance of firms, we use Ordinary Least Squares (OLS) and Fixed Effects Models.Findings: Accordingly, the findings indicate a significant positive correlation between sustainability reporting and two corporate performance measures: ROA and ROE, especially among large firms with effective governance mechanisms. Furthermore, sustainable firms have lower financial leverage than less sustainable ones. However, auditor type not found to exert a significant influence on financial performance.Implications/Originality/Value: The study examines Saudi Arabia’s listed manufacturing industry in Tadawul Stock Exchange future research may investigate other industries and new and growing markets for overall generalizability of the findings. Corporate strategists as well as policymakers will learn how sustainability reporting positively influences firms’ financial performance in Line with Saudi Arabia Vision 2030. Sustainability reporting improves the organizational and stakeholder accountability, promoting corporate efficiency and sustainable development, formation of natural resource conservation, and social policies.Originality/value: The current research further fills the research gap with respect to sustainability reporting in emerging economy with a focus on Saudi Arabia manufacturing firms and its evidential support on financial outcomes.

Keywords: Saudi Arabia; Manufacturing; Industry; Financial Performance; Sustainability Reporting Disclosure (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:src:sbseec:v:7:y:2025:i:1:p:25-38

DOI: 10.26710/sbsee.v7i1.3250

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