The effect of corporate sustainability disclosure on financial performance in ASEAN countries

Abstract

The main purpose of the study was to investigate the extent of corporate sustainability disclosures and financial performance from 2010 to 2014. To study the relationship between the extent of GRI disclosures and the financial performance, a GRI guideline was developed to identify GRI practices in ASEAN companies: Thailand, Malaysia, Indonesia, the Philippines, and Singapore. The process was employed to develop an index based on six GRI indicators: economic, environmental, labor, society, human rights, and product responsibility. The financial performance measurements included: return on assets, return on equity, and net sales. Secondary data from 260 ASEAN listed companies were analyzed using Multiple Linear Regression at the statistically significant level of 0.05. The results illustrated that corporate sustainability disclosures had a significant relationship with financial performance. The result of asset returns related to GRI disclosure at the environmental level and product responsibility. The result of returns on equity related to GRI disclosure at the environmental level. The net sales result related to GRI disclosure at the environment and labor level. Additionally, the results showed that the sustainability disclosure of environment information had an impact on financial performance. These findings help to understand that corporate sustainability disclosure is an important driver mechanism for organizations to make their learning more efficient, effective, and sustainable.