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Is Sustainability Reporting a Business Strategy for Firm’s Growth? Empirical Study on the Romanian Capital Market

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  • Mihai Carp

    (Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania)

  • Leontina Păvăloaia

    (Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania)

  • Mihai-Bogdan Afrăsinei

    (Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania)

  • Iuliana Eugenia Georgescu

    (Department of Accounting, Business Information Systems and Statistics, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iasi, Romania)

Abstract

This study analyzed the impact of sustainability reporting on firms’ growth as a result of adopting an environmentally and socially responsible behavior. The information published by companies listed on the main section of the Bucharest Stock Exchange during a period spanning six financial years (2012–2017) was used to assess the influence exerted by the conduct of activities related to sustainability; the integrated reporting of economic, social and environmental protection information; and the quality of published reports on certain indicators relevant to appreciating a firm’s growth (price-to-book ratio, sales growth and cost of capital). The results obtained indicate a low influence of sustainable reporting on a firm’s growth indicators. Current and potential investors, lenders and business partners interpret sustainability reporting as insufficiently documented and as having a low capacity for integration within the decision-making process. However, significant dependency relationships were identified, and particularized on various connections without following a correlation pattern between a firm’s growth directions and the indicators of sustainability reporting. The results remain robust even after the introduction of certain control variables, such as sustainability sensitive industry sectors, company size and age, or increase of investments. Our paper sets out to contribute to expanding the specialty literature by highlighting the involvement of sustainable reporting as a factor in optimizing firms’ growth strategies and, at a methodological level, by using a quantile regression.

Suggested Citation

  • Mihai Carp & Leontina Păvăloaia & Mihai-Bogdan Afrăsinei & Iuliana Eugenia Georgescu, 2019. "Is Sustainability Reporting a Business Strategy for Firm’s Growth? Empirical Study on the Romanian Capital Market," Sustainability, MDPI, vol. 11(3), pages 1-21, January.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:3:p:658-:d:201110
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