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The Value Relevance of Non-Financial Reporting in Determining the Market Value of Equity

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  • Elena NECHITA

    (The Bucharest University of Economic Studies, Romania)

Abstract

The value relevance of non-financial reporting is a topic of interest in the academic literature, the results of empirical research being often contradictory. In this context, the research objective is analysing the extent to which the disclosure of non-financial information related to sustainable development in the contents of sustainability reports published by companies listed on the regulated market of the Bucharest Stock Exchange (BSE) is influencing their market value. To conduct the analysis, the present study involves the application of multiple linear regression models developed based on the Ohlson (1995) model for a sample of 34 companies listed on BSE between 2015-2019, forming a number of 166 firm-year observations. The research methodology is based on the association between the firm market value and its equity book value, as well as its net income and other relevant information. Therefore, the value relevance is investigated through their impact on the market value. The findings emphasise an increase in relevance in terms of the influence exerted on the market value of capital as a result of reporting on sustainability issues. Moreover, the study highlights an increase in the impact of equity book value and net income on firms’ market value in the period after the adoption of Directive 2014/95/EUD (2017-2019), compared to the previous period (2015-2016). This research complements the literature in the field of sustainability reporting and value relevance, providing empirical evidence on the importance of publishing non-financial information in relation to their market value impact.

Suggested Citation

  • Elena NECHITA, 2021. "The Value Relevance of Non-Financial Reporting in Determining the Market Value of Equity," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 19(162), pages 320-320, May.
    • Handle: RePEc:aud:audfin:v:19:y:2021:i:162:p:320
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    References listed on IDEAS

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    1. Nadia Albu & Catalin Nicolae Albu & Madalina Dumitru & Valentin Florentin Dumitru, 2013. "Plurality or convergence in sustainability reporting standards?," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 15(Special 7), pages 729-742, November.
    2. Barth, Mary E. & Beaver, William H. & Landsman, Wayne R., 2001. "The relevance of the value relevance literature for financial accounting standard setting: another view," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 77-104, September.
    3. Dafna M. DiSegni & Moshe Huly & Sagi Akron, 2015. "Corporate social responsibility, environmental leadership and financial performance," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 11(1), pages 131-148, March.
    4. Lars Hassel & Henrik Nilsson & Siv Nyquist, 2005. "The value relevance of environmental performance," European Accounting Review, Taylor & Francis Journals, vol. 14(1), pages 41-61.
    5. Alexander Landau & Janina Rochell & Christian Klein & Bernhard Zwergel, 2020. "Integrated reporting of environmental, social, and governance and financial data: Does the market value integrated reports?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(4), pages 1750-1763, May.
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    Cited by:

    1. Laura-Eugenia-Lavinia Barna & Bogdan-Ștefan Ionescu & Liliana Ionescu-Feleagă, 2021. "The Relationship between the Implementation of ERP Systems and the Financial and Non-Financial Reporting of Organizations," Sustainability, MDPI, vol. 13(21), pages 1-17, October.

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    More about this item

    Keywords

    sustainability; Sustainable Development Goals (SDG); value relevance; market value; listed companies; empirical research;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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