Sustainability reporting analysis: the materiality impact on corporate financial performance
Sustainability reporting analysis: the materiality impact on corporate financial performanceAngeloantonio Russo - Rosamartina Schena
Objectives. This study investigates, with the lens of the stakeholder, whether the quality of materiality, expressed in terms of depth and breadth, can lead to an increase in corporate financial performance (CFP). The study aims to verify whether the achievement of higher corporate social performance (CSP) contributes to improving the positive effect of materiality on the CFP.
Methodology. A content analysis of the firms sustainability repost was developed. Additionally, a series of hierarchical regressions with a one-year lag time and moderation analysis were performed.
Findings. The analysis confirms that materiality quality has a positive impact on CFP. It was also verified that the effect of materiality on the CFP is amplified by the increase of the CSP. The results show that both the depth and breadth have a positive impact on CFP.
Research limits. A limitation would concern the country effect of the study, which is focus on American company.
Practical implications. Management should invest in an effective materiality process with which to communicate the company’s commitment to more responsible actions in relation to each category of stakeholder, in order to receive superior economic and financial returns.
Originality of the study. This is the first study that attempts to understand the materiality process through the lens of stakeholder theory. Sophisticated analysis methodology is performed on sustainability reports that allow to explore the depth and breadth, that is the quality, of reports.#corporate financial performance #corporate responsibility #corporate social performance #materiality #stakeholder