Impact of Sustainability Performance on Financial Performance: An Empirical Study of Global Fortune (N100) Firms

Nazim Hussain

No 1, Working Papers from Venice School of Management - Department of Management, Università Ca' Foscari Venezia

Abstract: Last three decades have witnessed a huge amount of research trying to establish how company's sustainability performance (SP) is related with financial performance (FP). Researchers have applied various methods and theoretical frameworks to investigate this relationship but results are still fragmented and competing. In this article, we analyze the relationship between SP measures (Economic, Environmental, and Social) and FP. Data for the for all SP dimensions are obtained by applying manual content analysis technique on the sustainability reports of Global Fortune N100 firms from 2007 to 2011. Differently from previous contributions, in this article sustainability disclosure (SD) and SP are considered jointly through a composite index. To best of our knowledge, the time series is the longest in this field of research. Finally, the compliance of sustainability report with Global Reporting Initiative (GRI) guidelines ensures a high degree of comparability and quality of information provided by the companies. Results obtained from fixed effect regression models reveal that the economic performance information is not relevant, while the impact of environmental and social dimensions of sustainability remains relevant and significant across different measures of FP. No evidence shows any relation between SP and ownership structure. The use of control sample further corroborates the relevance of sustainability dimension to explain changes in FP.

Keywords: Corporate Social Responsibility; Sustainability Disclosure; Global Reporting Initiative; G3 Guidelines; Firm Performance. (search for similar items in EconPapers)
JEL-codes: M40 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2015-06
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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