Littérature scientifique sur le sujet « Financial performance and: Sustainability Report »

The question posed in this study was whether local government is held accountable for their financial management, efficiency, effectiveness and sustainability and if local government reports contribute to this. In this study perceptions of how residents form their views about the performance of their local government were gained by interviewing residents and senior managers. Three local governments differing in the size of the organisation, the demography of the residents, and their urban environment took part in the study. A qualitative methodology within the constructivist paradigm was used with the rigour of the study being judged in terms of its method and analysis, and the findings and recommendations assessed against quality criteria particularly its usefulness in the real world of local government.Using a grounded research approach, the study found that residents’ perceptions of local government are highly subjective and influenced by many factors including trust in the local government, personal experience, public perceptions and personal values. Using economics of information theory in which the cost of information is balanced against the benefits of the information, residents’ behaviour was classified into four categories: detached, vicarious, specific purpose and engaged. A tentative model of assurance emerged from the findings. The model provides a means of explaining the personal, institutional and exogenous conditions that affect the benefits and cost to residents of performance information. The emergent model was used to understand issues about the accountability of local government, and implications for community engagement, models of management and local government sustainability programmes.

The corporate scandals in the beginning of the 21st century caused distrust in the market and a pressure for more disclosure to increase transparency. To broaden the traditional reporting, companies started to voluntarily disclose information regarding soft measures like Corporate Social Responsibility (CSR). Due to the fast development and popularity of CSR, more companies started to disclose a separate sustainability report to communicate information about these activities. The aim of the report is to provide stakeholders with accurate and transparent information regarding the companies CSR activities, but also to legitimize the business. The main purpose of this research is to investigate if the quantity of information disclosed in the sustainability report affects the financial performance of companies listed on NASDAQ OMX Stockholm. We also aim to investigate whether the existence of a report affects the financial performance. With companies spending an increasing amount of resources on disclosing voluntary information it is important to extend the research regarding CSR and the benefits to financial performance. This research ontological and epistemological positions are objectivism and positivism with a deductive approach. A quantitative method was used to gather sufficient data from existing databases and reports. For the first research question our population is all companies listed on NASDAQ OMX Stockholm on April 12th 2013, and for the second research question our population is the companies with a separate sustainability report in English from the accounting year of 2011. The financial performance data was gathered from the period 2012-04-01-2013-03.31. To answer our research questions and sub- questions, six hypotheses were formulated based on relevant theories and previous studies. Several multiple linear regression analyses were performed to examine the relationship between the existence of the reports, and the quantity of information in them, to the company’s financial performance. Other regressions were performed to establish if the quantity disclosed was affected by industry classification or market capitalization size. Our results show that the neither the existence of a separate sustainability report nor the quantity of information disclosed in it has an effect on stock return. However, both having a separate sustainability and the quantity of information disclosed have a positive effect on stock volatility. Conclusively, companies do not benefit financially from disclosing their CSR activities through a separate sustainability report.

Background: Sustainability reporting has become increasingly important for firms that want to appease their stakeholders and the society, whilst possibly increasing the corporate financial performance (CFP) of the firm. This is because sustainability disclosures currently work as the main channel for firms to inform their stakeholders of the CSR practices and environmental management carried out by the company. However, there have been various previous studies that examine the relation between corporate social performance (CSP) or the reported CSP, and CFP but not a study that would focus on GRI’s adherence level and its effect on Firm value (FV). The adherence level in the context of a GRI Report refers to the extent to which the GRI Sustainability Reporting Framework and GRI Standards have been applied to a company’s sustainability report (Global Reporting Initiative, n.d.). This study intends to examine if stakeholders can be affected by a sustainability report’s adherence ranking made by GRI, although there necessarily would not be a clear connection to a company’s actual environmental performance.  Purpose: The purpose of this study is to find out if the adherence level affects a firm’s value and how, although this classification of reports would not say anything about a company’s level of sustainability or a company’s sustainability performance. In short, the study wants to examine if stakeholders or the society surrounding a company are affected by the adherence level of a company’s GRI reporting and if this then can affect the value of the organization in any way. Aim: The aim of this research is to encourage organizations to become more transparent or elaborate regarding their sustainability practices if any significance between the adherence level and the FV can be found.  Method: This study was conducted by examining 98 European manufacturing firms’ GRI adherence levels for the years 2017 to 2019 and comparing them to respective Firm Values (Tobin’s Q) by the usage of panel data regression analysis.  Conclusion: The results show that no significant relationship between the GRI adherence level and FV can be found in the European manufacturing industry for the period 2017 to 2019.

Sustainability has been assuming a key role into companies’ and society’s development as a consequence of worldwide economic and market situation: there is instability, caused by market vitality and dynamism, in particular after the recent financial crisis. This overall situation has increased the asymmetry between corporate disclosed information and stakeholders’ informational needs, which cannot be satisfied through the traditional financial statement. For these reasons, especially over the last decade, sustainability reporting has been adopting by more and more companies, also thanks to international organisation work such as the Global Reporting Initiative (GRI) that provides guidelines and standards for a common format of sustainability reporting. The practise to report the economic, social, environmental, and governance information can have a relation or impact on the corporate financial performance and enterprise value, perceived by stakeholders. In this dissertation, there is an in-depth analysis of sustainability concept, sustainability reporting, in particular related to GRI Guidelines, and an empirical analysis about the relationship between GRI sustainability indices and corporate financial data, utilising a sample of about 45 companies listed in Fortune 500.

This dissertation consists of two empirical papers that explore recent phenomena in Banking and Microfinance Performance. Chapter 1, “Market Power and Bank Performance in MENA Countries,” examines the determinants of market power in 12 Middle Eastern and North African (MENA) countries in the aftermath of the Global Financial Crisis (GFC), specifically within six Gulf Cooperation Countries and six non-Gulf countries. We examine the dynamics of bank competition in MENA countries, provide an up-to-date assessment of market power, investigate the factors impacting bank competition, and explore the evolution of market power during the financial crisis. Our results show an overall increase in market power following the GFC for both regions. We find that bank size, capitalization, and diversification affect market power differently in the pre-crisis and post-crisis years. Larger banks enjoy cost advantages and the diversification impact on market power has decreased in the post-crisis years and the impact of capitalization on market power increased during the GFC. Overall, banks with higher capitalization can better weather the crisis. Chapter 2, “The impact of firm-level characteristic and county-specific attributes on the performance and efficiency of the Microfinance institutions,” estimates the impact of country-specific macro-variables and firm-specific attributes on the financial performance and the efficiency of microfinance institutions (MFIs). We use a large international up-to-date database consisting of over 10,000 firm-years for MFIs over 89 countries during the period 2008-2015. Several interesting findings emerge: a) regulation and outreach are negatively correlated. b) There is a negative and highly statistically significant correlation between the percentage of female borrowers and loan size, which is evidence of “mission drift”. c) An increase in the percentage of female board member has positive and statistically significant effect on MFIs profitability and ROA; which emphasizes the importance of female participation in leading position in MFIs.

Sustainability assurance is on the uprising. Nowadays, more and more companies are thinking about sustainability which resulted in a growing market for sustainability assurance. The global reporting initiative (2013, p.6) defines sustainability assurance as “the use of external, independent reviews of sustainability management processes and final disclosures is intended to increase the robustness, accuracy and trustworthiness of disclosed information.”. Unlike financial auditing, sustainability assurance ismostly unregulated and there are various guidelines and frameworks issued to help the assurance provider. The lack of mandatory regulations has resulted in a fragmented assurance environment where different approaches is used by different assurance providers. This in turn has contributed to the sustainability assurance process being unknown. The uncertainty around sustainability assurance affect the usersof the assurance report, for example stakeholders’, which can find it difficult to identify, interpretand compare the results of the sustainability assurance.The purpose of this study is to contribute to the limited knowledge on sustainability assurance, by investigating the sustainability assurance from both auditors’ and non-auditors’ perspectives.To assist in fulfilling the purpose, four main themes were developed; assurance team, assurance process, assurance report and the future of sustainability assurance. To fulfill the purpose of this study, the research questions are;“What is the audit process of sustainability reports?”“What does the sustainability assurance team look like?”“What does the sustainability assurance report look like?”The result in this study suggests that the process of sustainability assurance looks different depending on the assurance provider. The findings also suggest that the assurance team almost looks the same, regardless who is the assurance provider. When it comes to the results regarding the assurance report, it is evident that there are many ways to improve theusefulness and informativeness of the report. Furthermore, the findings of this study contribute to the limited knowledge of sustainability assurance by thoroughly exploring the assurance process.

In the past years, the interest on corporate sustainability has grown rapidly and it has become very important topic; many companies are making efforts to become more and more sustainable. However, the impact of corporate sustainability on firm’s financial performance has been widely debated. This study investigates the effects of sustainability performance on financial performance, in particular on firm value, measured with Tobin’s Q ratio. We have tried to identify the source of market value by disaggregating the effects on the different components of Gordon’s formula: expected dividends, WACC cost of equity and growth rate. The empirical evidence shows that environmental and social dimensions of sustainability are positively and significant related with company’s value. Additional evidence suggests that environmental sustainability negatively affects expected dividends and that sustainability performance has no significant influence on WACC cost of equity and growth rate.

In this thesis, the traditional methods of only using ESG scores to screen stocks for sustainable portfolios is broadened. The selection of securities for portfolios will instead depend on aggregation, weighting and normalization of a wider set of sustainability variables, in turn creating more all-encompassing sustainability scores. Using these scores, the aim is to implement them in index tracking portfolios. These portfolios combines a hybrid approach between active and passive investment, with the aim of creating sustainable enhanced index funds that can beat the index without adding significant risk. Additionally, this allows for comparison of how different combinations and levels of sustainability affects returns, risk and index tracking. The results that are obtained shows that in the scenario presented in the thesis, it is possible to create a sustainability score which both increases the average sustainability of portfolios, and yields risk adjusted returns. We also studied how a net increase in sustainability scores over a control portfolio results in higher active returns, and eventually a small drop off in information ratio as we apply too strong of a sustainability constraint to our portfolios. The combination of sustainability scores which showed the highest risk adjusted returns was created using equal parts z-scored ESG ratings, ESG risk ratings and ESG momentum.<br>Detta examensarbete breddar de traditionella metoderna för att skapa hållbara portföljer. Genom att basera urvalet av aktier på aggregering, viktande och normalisering av ett större set av hållbarhetsvariabler, jämfört med traditionell screening baserad på endast ESG betyg, skapas mer omfattande hållbarhetsbetyg. Syftet med studien är att implementera dessa hållbarhetsbetyg vid skapandet av index-portföljer och analysera resultaten. Dessa portföljer kombinerar då både aktiva och passiva investeringsprinciper, med målet att skapa hållbara indexnära fonder som kan prestera bättre än indexet, utan signifikant höjd risk. Dessa hållbarhetsbetyg tillåter även jämförelse av hur olika kombinationer och nivåer av hållbarhet påverkar avkastning, risk och närhet till index. Resultaten visar tydligt att det, inom uppsatsens avgränsningar, är möjligt att skapa hållbarhetsbetyg som ökar både hållbarheten av portföljer i snitt, och skapar riskjusterad avkastning. Det visar även hur en relativ höjning av hållbarhetsbetygen resulterar i högra aktiv avkastning jämfört med en kontroll-portfölj. Vid en viss nivå av höjning sker dock en avtappning av den riskjusterade avkastningen. Den kombinationen av hållbarhetsvariabler som visar högst riskjusterad avkastning när de aggregeras till ett hållbarhetsbetyg är en kombination, i lika delar, av ESG betyg, ESG risk och ESG momentum.

Global warming and environmental impact are topics that have received increased attention in recent years. Research suggests that companies should take more responsibility for this impact. Scholars have expressed contradicting opinions on whether these sustainability initiatives result in new risks and thereby lead to worse financial performance or will benefit the organization. This qualitative multiple case study uses an abductive approach to examine how risks associated with environmental sustainability initiatives are perceived to impact financial performance as well as how these risks can be managed in practice. Based on existing literature on environmental sustainability, risk management, and financial performance combined with interviews conducted with six representatives from three different companies in the Swedish manufacturing industry, a framework is developed. The framework presents a link from sustainability initiatives to risks, which can result in negative impacts on financial performance. The study further shows a positive relation between sustainability and financial performance, indicating that financial benefits can be gained from working with sustainability. Additionally, it is found that sustainability-related risks should be managed differently than business-related risks in organizations. The presented framework therefore indicates a necessity of establishing sustainability risk management strategies. The four main strategies identified were i) creating a shared mindset which allows for understanding of risks in the organization, ii) increasing communication and collaboration across departments, iii) actively working with risk identification to understand its behavior, and iv) establishing constant revision of risk management strategies.