Corporate sustainability disclosure and investment efficiency: an empirical analysis of East Africa Community listed firms

PurposeThis study examines the association between corporate sustainability disclosure (CSD) and investment efficiency.Design/methodology/approachThe study uses a sample of 410 firm-year observations drawn from 41 nonfinancial firms listed in the East African Community (EAC) partner states’ stock/securities exchanges between 2013 and 2022.FindingsThe study findings provide empirical evidence that high levels of CSD leads to improved investment efficiency. Based on the findings, high CSD firms benefit from reduced information asymmetry and strong stakeholder engagement.Practical implicationsThe study highlights the importance of CSD in predicting a firm’s investment efficiency; thus, it has both practical and policy implications. First, corporate managers can attract more investors through social and environmental disclosures. Second, regulators and financial reporting standards setters can enhance corporate investment efficiency through policies geared towards adoption of CSD.Originality/valueThis study is the first attempt to investigate the nexus between CSD and investment efficiency within the EAC. The results of this study demonstrate the impact of CSD on corporate investment efficiency. Furthermore, CSD is not only focused on maximizing shareholder value but also on promoting corporate social and environmental accountability aimed at mitigating climate change.