Environmental, Social, Governance & Financial Performance Disclosure for Large Firms: Is This Different for SME Firms?
Article
Article Title | Environmental, Social, Governance & Financial Performance Disclosure for Large Firms: Is This Different for SME Firms? |
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ERA Journal ID | 41498 |
Article Category | Article |
Authors | Gholami, Amir (Author), Murray, Peter A. (Author) and Sands, John (Author) |
Journal Title | Sustainability |
Journal Citation | 14 (10), pp. 1-21 |
Article Number | 6019 |
Number of Pages | 21 |
Year | 2022 |
Publisher | MDPI AG |
Place of Publication | Switzerland |
ISSN | 2071-1050 |
Digital Object Identifier (DOI) | https://doi.org/10.3390/su14106019 |
Web Address (URL) | https://www.mdpi.com/2071-1050/14/10/6019 |
Abstract | This study examines the association between a firm’s environmental, social and governance (ESG) performance and financial performance by examining the extent to which stakeholder and legitimacy theory help explain the effects on explanatory variables used in the study. Moreover, the study makes a novel contribution to existing ESG and performance-based studies by exploring the explanatory effects of ESG and firm performance over ten years. In addition, the study discusses the ESG-performance link of SMEs, thus advancing existing knowledge related to ESG in respect of SME performance. The study uses an extensive Australian sample from Bloomberg’s database from 2007 to 2017, while panel regression analysis is applied to investigate the relationship between a firm’s ESG performance and profitability. The robustness of the results is evaluated after incorporating several robustness checks to address methodological, endogeneity and causality issues related to a firm’s ESG performance disclosure. The empirical findings of this study suggest that improving a firm’s ESG performance is beneficial to all stakeholders of large firms in the long run but not for SME companies. The theoretical model suggests that listed SMEs do not disclose their ESG activities for various reasons, such as a lack of necessary resources. Specifically, the study extends scholarly understanding of existing theory and discusses the significance of the findings for future research. |
Keywords | environmental; social and governance; firm financial performance; stakeholder theory; legitimacy theory; voluntary disclosure |
ANZSRC Field of Research 2020 | 350107. Sustainability accounting and reporting |
Byline Affiliations | School of Business |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q7587/environmental-social-governance-financial-performance-disclosure-for-large-firms-is-this-different-for-sme-firms
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