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The Impact of Sustainability Reporting on the Earnings Response Coefficient of the Iraqi-Listed Companies
Corresponding Author(s) : Rawaa Ghazi
American Journal of Economics and Business Management,
Vol. 7 No. 9 (2024): September
Abstract
This study examines the impact of sustainability reporting on the Earnings Response Coefficient (ERC) of companies listed on the Iraq Stock Exchange. The ERC reflects the effect of unexpected earnings on stock returns, and sustainability reporting is expected to enhance company legitimacy and trust, potentially increasing the ERC. Despite the growing importance of sustainability practices, there is limited research on their influence on the ERC in emerging markets like Iraq. Using data from 33 firms from 2012-2022 and employing multiple linear regression with panel data analysis, the results indicate that Iraqi companies experience only slight improvements in ERC through sustainability reporting. These findings suggest that sustainability reporting can enhance a company's reputation and legitimacy, contributing to increased ERC. The study highlights the need for policymakers to strengthen sustainability reporting requirements and provides insights for investors seeking to optimize portfolios based on corporate sustainability compliance.
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- H. O. Aifuwa, "Sustainability Reporting and Firm Performance in Developing Climes: A Review of Literature," Copernican Journal of Finance & Accounting, vol. 9, no. 1, pp. 9-29, 2020.
- A. N. M. Al-Obaidi, "Evaluation of Reporting on the Sustainability of Industrial Companies According to Indicators," Master's thesis, Administrative Technical College/Kufa, Al-Furat Al-Awsat Technical University, Iraq, 2018.
- C. Boonnual, W. Prasertsri, and P. Panmanee, "Corporate Social Responsibility and Firm Performance in Thailand," Journal of Business and Retail Management Research, vol. 12, no. 1, 2017.
- F. Caputo, S. Pizzi, L. Ligorio, and R. Leopizzi, "Enhancing Environmental Information Transparency Through Corporate Social Responsibility Reporting Regulation," Business Strategy and the Environment, vol. 30, no. 8, pp. 3470-3484, 2021.
- P. Dmuchowski, W. Dmuchowski, A. H. Baczewska-Dąbrowska, and B. Gworek, "Environmental, Social, and Governance (ESG) Model; Impacts and Sustainable Investment—Global Trends and Poland's Perspective," Journal of Environmental Management, vol. 329, p. 117023, 2023.
- B. Freudenreich, F. Lüdeke-Freund, and S. Schaltegger, "A Stakeholder Theory Perspective on Business Models: Value Creation for Sustainability," Journal of Business Ethics, vol. 166, no. 1, pp. 3-18, 2020.
- G. Halkos and S. Nomikos, "Corporate Social Responsibility: Trends in Global Reporting Initiative Standards," Economic Analysis and Policy, vol. 69, pp. 106-117, 2021.
- I. Damen, "Quality of Assurance on Sustainability Reports: A Study on Determinants of the Quality of External Sustainability Assurance," Master's thesis, Nijmegen School of Management, Radboud University, Netherlands, 2016.
- J. M. Lopes, S. Gomes, R. Pacheco, E. Monteiro, and C. Santos, "Drivers of Sustainable Innovation Strategies for Increased Competition Among Companies," Sustainability, vol. 14, no. 9, p. 5471, 2022.
- S. U. Rehman, A. Bhatti, S. Kraus, and J. J. Ferreira, "The Role of Environmental Management Control Systems for Ecological Sustainability and Sustainable Performance," Management Decision, vol. 59, no. 9, pp. 2217-2237, 2021.
- D. Pérez-López, A. Moreno-Romero, and R. Barkemeyer, "Exploring the Relationship Between Sustainability Reporting and Sustainability Management Practices," Business Strategy and the Environment, vol. 24, no. 8, pp. 720-734, 2015.
- T. B. Ramos, T. Cecílio, C. H. Douglas, and S. Caeiro, "Corporate Sustainability Reporting and the Relations With Evaluation and Management Frameworks: The Portuguese Case," Journal of Cleaner Production, vol. 52, pp. 317-328, 2013.
- A. N. Al-Obaidi, "Evaluation of Reporting on the Sustainability of Industrial Companies According to Indicators," GRI, Master's thesis, Kufa, Iraq, 2018.
References
H. O. Aifuwa, "Sustainability Reporting and Firm Performance in Developing Climes: A Review of Literature," Copernican Journal of Finance & Accounting, vol. 9, no. 1, pp. 9-29, 2020.
A. N. M. Al-Obaidi, "Evaluation of Reporting on the Sustainability of Industrial Companies According to Indicators," Master's thesis, Administrative Technical College/Kufa, Al-Furat Al-Awsat Technical University, Iraq, 2018.
C. Boonnual, W. Prasertsri, and P. Panmanee, "Corporate Social Responsibility and Firm Performance in Thailand," Journal of Business and Retail Management Research, vol. 12, no. 1, 2017.
F. Caputo, S. Pizzi, L. Ligorio, and R. Leopizzi, "Enhancing Environmental Information Transparency Through Corporate Social Responsibility Reporting Regulation," Business Strategy and the Environment, vol. 30, no. 8, pp. 3470-3484, 2021.
P. Dmuchowski, W. Dmuchowski, A. H. Baczewska-Dąbrowska, and B. Gworek, "Environmental, Social, and Governance (ESG) Model; Impacts and Sustainable Investment—Global Trends and Poland's Perspective," Journal of Environmental Management, vol. 329, p. 117023, 2023.
B. Freudenreich, F. Lüdeke-Freund, and S. Schaltegger, "A Stakeholder Theory Perspective on Business Models: Value Creation for Sustainability," Journal of Business Ethics, vol. 166, no. 1, pp. 3-18, 2020.
G. Halkos and S. Nomikos, "Corporate Social Responsibility: Trends in Global Reporting Initiative Standards," Economic Analysis and Policy, vol. 69, pp. 106-117, 2021.
I. Damen, "Quality of Assurance on Sustainability Reports: A Study on Determinants of the Quality of External Sustainability Assurance," Master's thesis, Nijmegen School of Management, Radboud University, Netherlands, 2016.
J. M. Lopes, S. Gomes, R. Pacheco, E. Monteiro, and C. Santos, "Drivers of Sustainable Innovation Strategies for Increased Competition Among Companies," Sustainability, vol. 14, no. 9, p. 5471, 2022.
S. U. Rehman, A. Bhatti, S. Kraus, and J. J. Ferreira, "The Role of Environmental Management Control Systems for Ecological Sustainability and Sustainable Performance," Management Decision, vol. 59, no. 9, pp. 2217-2237, 2021.
D. Pérez-López, A. Moreno-Romero, and R. Barkemeyer, "Exploring the Relationship Between Sustainability Reporting and Sustainability Management Practices," Business Strategy and the Environment, vol. 24, no. 8, pp. 720-734, 2015.
T. B. Ramos, T. Cecílio, C. H. Douglas, and S. Caeiro, "Corporate Sustainability Reporting and the Relations With Evaluation and Management Frameworks: The Portuguese Case," Journal of Cleaner Production, vol. 52, pp. 317-328, 2013.
A. N. Al-Obaidi, "Evaluation of Reporting on the Sustainability of Industrial Companies According to Indicators," GRI, Master's thesis, Kufa, Iraq, 2018.