THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL

Márcia Faria; Sónia Monteiro; Vanda Roque

doi:10.17261/Pressacademia.2024.1942

THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL

Abstract

Purpose- The purpose of this paper is to investigate if the quality of sustainability reporting influences the financial performance of the largest Portuguese companies. Specifically, the paper aims to: i) evaluate the quality of sustainability reporting among Portuguese companies; ii) determine whether sustainability reporting quality impacts their financial performance. Methodology- We evaluate sustainability reporting quality through content analysis of 2021 sustainability reports. Based on GRI Standards 502 disclosure requirements, we created a Sustainability Reporting Quality Index calculated as the ratio of disclosed items to total requirements. This global index is also divided into economic, environmental, and social sub-indices. To analyze the impact of sustainability reporting quality on financial performance, we used a multiple linear regression model with ROE for 2022 as the dependent variable, and the sustainability index as independent variable. We also control for company size, revenue growth, and leverage. Findings: The results indicate that Portuguese companies meet on average about 20% of GRI Standards disclosure requirements, indicating relatively low reporting quality. Among the sub-indices, companies disclose mainly information on economic performance, followed by social and environmental information. The findings also reveal that, although sustainability reporting quality has a positive effect on the financial performance of Portuguese companies, this impact is not statistically significant across all indices. Among the control variables, only revenue growth rate is statistically significant, exhibiting a positive relationship with financial performance. Conclusion: This study investigates the impact of sustainability reporting quality on the financial performance of large Portuguese companies, using an innovative sustainability reporting index based on all GRI Standards disclosure requirements. The study finds that sustainability reporting quality in Portugal is generally low and has no significant impact of financial performance. A key limitation is the focus on the short term, which may miss potential long-term effects.

Keywords

References

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Details

Primary Language

English

Subjects

Behavioural Finance, Finance, Finance and Investment (Other), Business Administration

Journal Section

Research Article

Authors

Márcia Faria ^* This is me
0009-0004-3005-9887
Portugal

Sónia Monteiro This is me
0000-0003-2149-4962
Portugal

Vanda Roque This is me
0000-0001-6038-1851
Portugal

Publication Date

December 31, 2024

Submission Date

September 11, 2024

Acceptance Date

November 2, 2024

Published in Issue

Year 2024 Volume: 13 Number: 2

DOI

https://doi.org/10.17261/Pressacademia.2024.1942

IZ

https://izlik.org/JA59CU73YH

Cite

RIS / Bibtex

APA

Faria, M., Monteiro, S., & Roque, V. (2024). THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL. Journal of Business Economics and Finance, 13(2), 80-87. https://doi.org/10.17261/Pressacademia.2024.1942

AMA

1.Faria M, Monteiro S, Roque V. THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL. JBEF. 2024;13(2):80-87. doi:10.17261/Pressacademia.2024.1942

Chicago

Faria, Márcia, Sónia Monteiro, and Vanda Roque. 2024. “THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL”. Journal of Business Economics and Finance 13 (2): 80-87. https://doi.org/10.17261/Pressacademia.2024.1942.

EndNote

Faria M, Monteiro S, Roque V (December 1, 2024) THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL. Journal of Business Economics and Finance 13 2 80–87.

IEEE

[1]M. Faria, S. Monteiro, and V. Roque, “THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL”, JBEF, vol. 13, no. 2, pp. 80–87, Dec. 2024, doi: 10.17261/Pressacademia.2024.1942.

ISNAD

Faria, Márcia - Monteiro, Sónia - Roque, Vanda. “THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL”. Journal of Business Economics and Finance 13/2 (December 1, 2024): 80-87. https://doi.org/10.17261/Pressacademia.2024.1942.

JAMA

1.Faria M, Monteiro S, Roque V. THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL. JBEF. 2024;13:80–87.

MLA

Faria, Márcia, et al. “THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL”. Journal of Business Economics and Finance, vol. 13, no. 2, Dec. 2024, pp. 80-87, doi:10.17261/Pressacademia.2024.1942.

Vancouver

1.Márcia Faria, Sónia Monteiro, Vanda Roque. THE IMPACT OF THE QUALITY OF SUSTAINABILITY REPORTING ON THE FINANCIAL PERFORMANCE OF LARGE COMPANIES OPERATING IN PORTUGAL. JBEF. 2024 Dec. 1;13(2):80-7. doi:10.17261/Pressacademia.2024.1942