Abstract
PurposeThe purpose of this work is twofold. First, looks to identify the main homogenous groups of companies after environmental, social, economic and governance (ESEG) disclosures, non-financial statement and earnings per share (EPS), and second investigates the connection between variables.Design/methodology/approachUsing financial and non-financial information from annual reports of private listed companies, the authors performed two-step cluster analysis (TSCA) in the first stage of the research, followed by parametric, nonparametric correlation analysis, as well as regression analysis based on panel data, in the second stage.FindingsResults of TSCA revealed a cluster of companies with good financial and non-financial outcomes and a cluster of companies with poor performance. The performance dynamics showed a slight improvement during the period for few companies and composition analysis of clusters by industries through Kruskal–Wallis test highlighted differences between clusters, only for 2017. The main findings confirm a direct, although weak in intensity but statistically significant correlation between ESEG disclosure index, its sustainability component and financial performance (FP), valid for the entire period. Also, the results showed a direct link of low intensity to average, but statistically significant between the non-financial statement and EPS, valid only for 2017 and 2018.Research limitations/implicationsThe results indicate mixed findings which invites further in-depth research. Limits of the study can be found in selected indicators and the short period of time analyzed. However, the practical implications are worth considering from the perspective of finding new managerial tools that can better shape the relationship between ESEG disclosures and FP.Practical implicationsESEG Dindx can be an instrument for managers that can optimize the link between the FP of companies and its sustainable development.Social implicationsESEG Dindx measures the disclosure degree of ESEG information by the companies listed on Bucharest Stock Exchange (BSE). The main findings of the work confirm a direct, although weak in intensity but statistically significant correlation between ESEG disclosure index, its sustainability component and FP, valid for the entire period.Originality/valueThis study adds value to the existing literature by the proposed research framework, design of ESEG Dindx and the way correlations between variables were investigated.
Highlights
Modern reporting is no longer limited to classical financial information and extends to non-financial information
The disclosure degree of environmental, social, economic and governance (ESEG) information is a frequently investigated topic in correlation with performance indicators, as other studies revealed that financial performance (FP) is a significant indicator of the financial health of companies (Stefan, 2016; Sabau-Popa et al, 2020) and that it is influenced by the information disclosure policy
Previous studies conducted on Romanian companies listed on the Bucharest Stock Exchange (BSE) (Dospinescu and Dospinescu, 2018, 2019) or on SMEs (Sabau-Popa et al, 2020) have focused mainly on investigating FP using composite indicators, while others have been concerned with examining the relevance of non-financial information in the sustainable reporting of Romanian companies (Man and Bogeanu-Popa, 2020)
Summary
Modern reporting is no longer limited to classical financial information and extends to non-financial information. The disclosure degree of environmental, social, economic and governance (ESEG) information is a frequently investigated topic in correlation with performance indicators, as other studies revealed that financial performance (FP) is a significant indicator of the financial health of companies (Stefan, 2016; Sabau-Popa et al., 2020) and that it is influenced by the information disclosure policy. Previous studies conducted on Romanian companies listed on the Bucharest Stock Exchange (BSE) (Dospinescu and Dospinescu, 2018, 2019) or on SMEs (Sabau-Popa et al, 2020) have focused mainly on investigating FP using composite indicators, while others have been concerned with examining the relevance of non-financial information in the sustainable reporting of Romanian companies (Man and Bogeanu-Popa, 2020). In a comparative study conducted on oil polluting entities listed on the BSE and the Athens Stock Exchange, Artene et al (2020)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
