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Sustainability Reporting and Value Relevance of Financial Statements

Author

Listed:
  • Bambang Sutopo

    () (Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36A, Surakarta 57126, Indonesia)

  • Sebastian Kot

    () (Faculty of Applied Sciences, The University of Dabrowa Górnicza, ul. Cieplaka 1C, 41-300 Dąbrowa Górnicza, Poland
    Faculty of Economic Sciences and IT, North-West University, Vaal Triangle Campus, P.O. Box 1174, Vanderbijlpark 1900, South Africa)

  • Arum Kusumaningdyah Adiati

    () (Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36A, Surakarta 57126, Indonesia)

  • Lina Nur Ardila

    () (Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36A, Surakarta 57126, Indonesia)

Abstract

This study examines whether information about the winners of the Sustainability Reporting Award (SRA) contributes to the usefulness of the information in financial statements. This study used a sample consisting of 110 winners of SRA (SRA firms) and 110 companies that did not receive SRA (non-SRA firms) from 2008 to 2016. The study found that earnings per share (EPS), earnings per share change (EPSC), and book value per share (BVPS) are value-relevant information. Results of comparison between SRA firms and non-SRA firms show that the positive association between EPS and stock price (P) and the positive association of EPS with stock returns (R) for SRA firms are higher than that for the non-SRA firms. In addition, findings of this study indicate that EPSC is positively associated with R when EPSC and R are measured by Indonesian rupiah (IDR) instead of by percentage, and the positive association between EPSC and R for the SRA firms is higher than that for the non-SRA firms. Thus, the results are sensitive to measures of the variables. However, this study found that value relevance of BVPS for SRA firms is lower than for non-SRA firms. Implication of this study is that information about the winners of SRA contributes to the usefulness of financial statements, especially the information of EPS and EPSC.

Suggested Citation

  • Bambang Sutopo & Sebastian Kot & Arum Kusumaningdyah Adiati & Lina Nur Ardila, 2018. "Sustainability Reporting and Value Relevance of Financial Statements," Sustainability, MDPI, Open Access Journal, vol. 10(3), pages 1-14, March.
  • Handle: RePEc:gam:jsusta:v:10:y:2018:i:3:p:678-:d:134358
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    References listed on IDEAS

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    More about this item

    Keywords

    Sustainability Reporting Award (SRA); financial statements; value relevance; earnings per share (EPS); earnings per share change (CEPS); book value per share (BVPS);

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • 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
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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