Does Sustainability Reporting Lead to improved Financial Performance of Malaysian Public Listed Firms?

Abstract

Awareness of the sustainability Reporting (SR) nowadays, has increased among the firms worldwide. SR is not only a communication tool to disclose information to stakeholders, but also measures the performance of a firm associated with economic, environment and society. The principle issue currently isn't about the compliance of sustainability to the required standards or protection of firm image, but it is about disclosing the reliable information for the wider interest of stakeholders. Moreover, sustainability reporting is a costly and complicated process to prepare that’s why management is not interested in its implementation. In Malaysia, sustainability reporting is neglected due to lack of awareness on the significance of reporting with respect to economic, social and environmental perspectives.  In Southeast Asia, Malaysia has the highest rank to report sustainability, but the improvement is required. Though there is an increased acceptance of sustainability reporting worldwide, yet, Malaysia has contributed very little to the literature on sustainability. Therefore, this study has investigated this issue by examining the association between the individual components of SR and firm performance based on a sample of 200 Malaysian listed firms for the years 2013-2018 and consisting 1200 observations. The study is based on panel data and utilized pooled OLS regression method. Accordingly, the regression outcomes propose that there is a positive relationship between all three components of SR and financial performance.