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Corporate Sustainability Disclosure and Investment Efficiency: The Saudi Arabian Context

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  • Amel Kouaib

    (Saudi Investment Bank Scholarly Chair for Investment Awareness Studies, The Deanship of Scientific Research, The Vice Presidency for Graduate Studies and Scientific Research, King Faisal University, Al-Ahsa 31982, Saudi Arabia
    Accounting Department, School of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia)

Abstract

Drawing on legitimacy and stakeholders’ perspectives, this research aims to investigate the association between investment efficiency, a value-added corporate activity important to firm viability and profitability, and the environmental, social, and governance (ESG) reporting extent in a Saudi Arabian context. A sample of 25 Saudi firms reporting ESG information is used to test the research hypotheses. The sample is listed on the Saudi Exchange, with the research period spanning from 2014 to 2021. An OLS regression analysis shows that adopting ESG disclosure practices promote and maintain corporate investment efficiency. It displays a significant effect of corporate sustainability disclosure on the under- and over-investment levels of Saudi indexed firms. These findings are important in terms of sustainable reporting and development for the Middle East region in general and for Saudi Arabia in particular. They provide confirmation of the importance of ESG reporting as a key driver of enhanced corporate investment and bring additional evidence for regulators, policymakers, and standard-setters in terms of the effect of ESG on each sector.

Suggested Citation

  • Amel Kouaib, 2022. "Corporate Sustainability Disclosure and Investment Efficiency: The Saudi Arabian Context," Sustainability, MDPI, vol. 14(21), pages 1-13, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:21:p:13984-:d:954988
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    Cited by:

    1. Oh-Suk Yang & Jae-Hoon Han, 2023. "Assessing the Effect of Corporate ESG Management on Corporate Financial & Market Performance and Export," Sustainability, MDPI, vol. 15(3), pages 1-30, January.
    2. Mohammed Taj Hejazi & Bader Al Batati & Ahmed Bahurmuz, 2023. "The Influence of Green Supply Chain Management Practices on Corporate Sustainability Performance," Sustainability, MDPI, vol. 15(6), pages 1-16, March.
    3. Zhenjie Wang & Jiewei Zhang & Hafeez Ullah, 2023. "Exploring the Multidimensional Perspective of Retail Investors’ Attention: The Mediating Influence of Corporate Governance and Information Disclosure on Corporate Environmental Performance in China," Sustainability, MDPI, vol. 15(15), pages 1-33, August.

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