Environmental, Social, Governance & financial performance disclosure for large firms: Is this different for SME firms?

Journal article


Arian, Adam Gholami, Murray, Peter and Sands, John. (2022). Environmental, Social, Governance & financial performance disclosure for large firms: Is this different for SME firms? Sustainability. 14(10), pp. 1-21. https://doi.org/10.3390/su14106019
AuthorsArian, Adam Gholami, Murray, Peter and Sands, John
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.

Keywordsenvironmental; social and governance; firm financial performance; stakeholder theory; legitimacy theory; voluntary disclosure
Year01 Jan 2022
JournalSustainability
Journal citation14 (10), pp. 1-21
PublisherMDPI
ISSN2071-1050
Digital Object Identifier (DOI)https://doi.org/10.3390/su14106019
Web address (URL)https://www.mdpi.com/2071-1050/14/10/6019
Open accessOpen access
Research or scholarlyResearch
Page range1-21
Publisher's version
License
File Access Level
Open
Output statusPublished
Publication dates
Online16 May 2022
Publication process dates
Accepted12 May 2022
Deposited27 Jun 2024
Additional information

© 2022 by the authors. Licensee MDPI, Basel, Switzerland

This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).

Place of publicationAustralia
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https://acuresearchbank.acu.edu.au/item/90q3z/environmental-social-governance-financial-performance-disclosure-for-large-firms-is-this-different-for-sme-firms

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