Is sustainability reporting a way forward? Evidence from banking industry
Abstract
Purpose
This paper aims to examine the influence of sustainability reporting on bank performance. Furthermore, this study investigates the impact of the country’s economic development, financial system and crisis in moderating sustainability reporting and bank performance relationship.
Design/methodology/approach
The sample consists of 400 listed banks from 19 countries over the 2009–2022 period. Panel fixed-effect regression is applied, and System Generalized Method of Moments is used as robustness to address endogeneity concerns. The results are robust and survive several sensitivity tests.
Findings
The results, aligning with legitimacy and agency theories, suggest a negative relationship between sustainability reporting and bank performance. Based on further classifications, results suggest the negative (positive) impact of country’s financial system (economic development) in moderating the sustainability reporting and bank performance nexus. Finally, this study documents the positive influence of sustainability reporting on bank performance during the crisis period. Overall, the findings fail to support the reduced information asymmetry accruing from higher sustainability disclosures in developing and bank-based economies.
Practical implications
This study has important implications for regulators, policymakers and other stakeholders, especially in light of recent banking scandals that have deteriorated stakeholders' faith in financial institutions' reporting quality.
Originality/value
This study extends the scant literature on sustainability reporting in banking from a cost-benefit vantage point. Furthermore, to the best of the author’s knowledge, no previous research has examined the moderating role of the country’s financial structure and crisis in sustainability reporting and bank performance relationship.
Keywords
Acknowledgements
The author thanks the Editor-in-Chief, Professor Warren Maroun, and the anonymous reviewers for their insightful comments. All the errors are author’s own responsibility.
Funding: This work was supported by University Grants Commission, New Delhi, India, under the scheme Junior Research Fellowship in Sciences, Humanities and Social Sciences [190510900923].
Declaration of competing interest: The author certifies that he has no affiliations with any organization or financial or nonfinancial interest in the subject matter discussed in this study.
Citation
Gupta, M. (2024), "Is sustainability reporting a way forward? Evidence from banking industry", Meditari Accountancy Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MEDAR-03-2024-2408
Publisher
:Emerald Publishing Limited
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