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KPIs Reporting and Financial Performance in the Transition to Mandatory Disclosure: The Case of Italy

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  • Salvatore Loprevite

    () (Department of Sciences of the Society and the Mediterranean Area Formation, University “Dante Alighieri” of Reggio Calabria, 89125 Reggio Calabria, RC, Italy)

  • Domenico Raucci

    () (Department of Economic Studies, University “G. d’Annunzio” of Chieti-Pescara, 65127 Pescara, PE, Italy)

  • Daniela Rupo

    () (Department of Economics, University of Messina, 98122 Messina, ME, Italy)

Abstract

European companies of public interest requested to comply with the Directive 2014/95/EU on Non-Financial Information (NFI) are allowed to fulfil the regulatory obligation following the Global Reporting Initiative (GRI) guidelines, which constitute at present the most widely spread framework for sustainability reporting. Given such prevalence, this paper examines the level of disclosure on Key Performance Indicators (KPIs) and its relationship with financial performance over the period 2016–2018 for Italian-listed companies adopting GRI guidelines to convey NFI under the Decree 254/2016. The research applies content analysis of the annual and sustainability reports to measure the disclosure index on KPIs, and Data Envelopment Analysis (DEA) to estimate the financial performance. A Tobit-regression model explores the nexus between financial performance and companies’ disclosure. Findings show a decrease in the disclosure levels in the early adoption of mandatory NFI and a significant association with the financial performance of the sampled companies. The study, assuming a comprehensive view of the financial indicators, improves our knowledge of the relationship between sustainability disclosure and financial performance and adds to the literature on the evolution of NFI in the transition from voluntary to mandatory regime.

Suggested Citation

  • Salvatore Loprevite & Domenico Raucci & Daniela Rupo, 2020. "KPIs Reporting and Financial Performance in the Transition to Mandatory Disclosure: The Case of Italy," Sustainability, MDPI, Open Access Journal, vol. 12(12), pages 1-24, June.
  • Handle: RePEc:gam:jsusta:v:12:y:2020:i:12:p:5195-:d:376318
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    Keywords

    sustainability performance indicators; financial performance; GRI Guidelines; Italy; data envelopment analysis;

    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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