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

Author

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  • Nazim Hussain

    (Dept. of Management, Università Ca' Foscari Venice)

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.

Suggested Citation

  • Nazim Hussain, 2015. "Impact of Sustainability Performance on Financial Performance: An Empirical Study of Global Fortune (N100) Firms," Working Papers 1, Department of Management, Università Ca' Foscari Venezia.
    • Handle: RePEc:vnm:wpdman:102
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    4. Puneeta Goel & Rupali Misra, 2017. "Sustainability Reporting in India: Exploring Sectoral Differences and Linkages with Financial Performance," Vision, , vol. 21(2), pages 214-224, June.
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    6. Camelia Oprean-Stan & Ionica Oncioiu & Iulia Cristina Iuga & Sebastian Stan, 2020. "Impact of Sustainability Reporting and Inadequate Management of ESG Factors on Corporate Performance and Sustainable Growth," Sustainability, MDPI, vol. 12(20), pages 1-31, October.
    7. Arumega Zarefar & Dian Agustia & Noorlailie Soewarno, 2022. "Bridging the Gap between Sustainability Disclosure and Firm Performance in Indonesian Firms: The Moderating Effect of the Family Firm," Sustainability, MDPI, vol. 14(19), pages 1-13, September.
    8. Najul Laskar & Tapan Kumar Chakraborty & Santi Gopal Maji, 2017. "Corporate Sustainability Performance and Financial Performance: Empirical Evidence from Japan and India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 42(2), pages 88-106, May.
    9. Xie Hongming & Bilal Ahmed & Arif Hussain & Alam Rehman & Irfan Ullah & Farman Ullah Khan, 2020. "Sustainability Reporting and Firm Performance: The Demonstration of Pakistani Firms," SAGE Open, , vol. 10(3), pages 21582440209, September.

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    Keywords

    Corporate Social Responsibility; Sustainability Disclosure; Global Reporting Initiative; G3 Guidelines; Firm Performance.;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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