Sustainability reporting and firm performance

Abstract

Purpose- The aim of this paper is to examine sustainability reporting and its relation with firm performance. We investigate whether such reporting practices improve the firm value while enhancing its profitability and the financial leverage impact on sustainability reporting in the automotive industry. Methodology- The paper’s design is based on panel data logistic regression analysis of 155 automotive firms from 20 different countries, between 2010-2018 years. We use financial data such as Tobin’s Q ratio of the public companies as well as firm size, financial leverage ratio and return on assets to measure the firm performance and we work with GRI’s reports on GRI Sustainability Disclosure Database. Findings- We find similar results with some prior literature explaining that sustainability reporting has a significant positive relation between firm size and negative relation with financial leverage. Conclusion- The study provides understandings on the relation of firm performance, firm size, financial leverage, and sustainability reporting. The findings of study indicate a positive significant relationship between firm size and SR, and a negative significant relationship between financial leverage and sustainability reporting in the automotive industry.