Edward ATTAH-BOTCHWEY, Michael Gift SOKU, David Mensah AWADZIE

2424

SUSTAINABILITY REPORTING AND THE FINANCIAL PERFORMANCE OF BANKS IN AFRICA

Purpose– This study examined the relationship between sustainability reporting and bank performance in Africa. Unlike previous studies that solely dwelled on accounting measures of performance, this study adopted both accounting (i.e., return on assets) and market-based measures of firm performance (i.e., Tobin's Q). Methodology– The study relied on secondary data gathered from the audited financial statements of listed banks in Africa over ten years from 2010 to 2020. Notably, the financial statements of 20 listed banks (drawn from Ghana, Nigeria, and South Africa) were subjected to quantitative content analysis to quantify the extent of sustainability content. It was guided by the sustainability reporting framework developed by the global reporting initiative. The content analysis aims to identify and classify the extent to which firms report on Economic, governance, social, and environmental dimensions of sustainability. Besides, the financial statement figures aided the computation of a performance measure (return on assets and Tobin's Q) for the banks. Concerning data analysis, the study utilized a panel fixed effect regression model to estimate the relationship between sustainability reporting and firm performance. Findings– The results suggest that economic, social, and governance reporting of sustainability content (in the financial statement) has a significant positive association with Tobin's Q and Return on Assets (ROA). Furthermore, the study's findings suggest that banks ' reportage of environmental sustainability content has a significant positive effect on ROA. However, it has no significant effect on Tobin's Q. Conclusion– Generally, the study concludes that increased sustainability reporting enhances bank performance in the long term. Among others, the study recommends that policymakers develop a sustainability framework specific to the banking industry's needs.
Keywords:

Sustainability return on assets, bank performance, framework,

PDF

___

  • Abernathy, J, Stefaniak, C, Wilkins, A, & Olson, J. (2017). Literature Review and Research Opportunities on the Credibility of Corporate Social Responsibility Reporting. American Journal of Business, 32(1). https://doi.org/http://dx.doi.org/10.1108/AJB-04-2016-0013
  • Francis Aboagye-Otchere Ibrahim Bedi Teddy Ossei Kwakye, (2012),"Corporate governance and disclosure practices of Ghanaian listed companies", Journal of Accounting in Emerging Economies, 2(2), 140 - 161
  • Abukari, A. J., Abdul-Hamid, I. K. (2018). “Corporate Social Responsibility Reporting in the Telecommunications Sector in Ghana.” International Journal of Corporate Social Responsibility 3 (1): 2. https://doi.org/10.1186/s40991-017-0025-9.
  • Bebbington, J., & Unerman, J. (2018). Achieving the United Nations Sustainable Development Goals: an enabling role for accounting research", Accounting, Auditing & Accountability Journal, https://doi.org/10.1108/AAAJ-05-2017-2929
  • Blaesing, D. (2013). Nachhaltigkeitsberichterstattung in Deutschland und den USA: Berichtspraxis, Determinanten und Eigenkapitalkostenwirkungen. Frankfurt/M: PL Acad. Research.
  • Bonsón, E., & Bednárová, M. (2015). CSR reporting practices of Eurozone companies. Revista de Contabilidad, 18(2), 182-193.
  • Brammer, S., & Pavelin, S. (2006). Voluntary environmental disclosures by large U.K. companies. Journal of Business Finance & Accounting, 33(7‐8), 1168-1188.
  • Branco, M. C., & Rodrigues, L. L. (2006). Corporate social responsibility and resource-based perspectives. Journal of Business Ethics, 69(2), 111-132.
  • Brown, T. J., & Dacin, P. A. (1997). The company and the product: Corporate associations and consumer product responses. Journal of Marketing, 61(1), 68-84.
  • Chen, J. C., & Roberts, R. W. (2010). Toward a more coherent understanding of the organization–society relationship: A theoretical consideration for social and environmental accounting research. Journal of business ethics, 97(4), 651-665.
  • Chen, Y. C., Hung, M., & Wang, Y. (2018). The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from
  • China. Journal of Accounting and Economics, 65(1), 169-190.
  • Crolic, C., Zheng, Y., Hoegg, J., & Alba, J. W. (2019). The influence of product aesthetics on consumer inference making. Journal of the Association for Consumer Research, 4(4), 398-408.
  • Elkington, J. (1994). Towards the sustainable corporation: Win-win-win business strategies for sustainable development. California Management Review, 36(2), 90-100.
  • Gibson, R. B. (2006). Sustainability assessment: Basic components of a practical approach. Impact Assessment and Project Appraisal, 24(3), 170–182
  • Gildea, R. L., (1994). Consumer Survey Confirms Corporate Social Action Affects Buying Decisions. Public Relations Quarterly, 39(4), 20–22.
  • Gillan, S., Hartzell, J. C., Koch, A., & Starks, L. T. (2010). Firms’ environmental, social, and governance (ESG) choices, performance, and managerial motivation. Unpublished working paper.
  • Handelman, J. M., & Arnold, S. J. (1999). The role of marketing actions with a social dimension: Appeals to the institutional environment. Journal of Marketing, 63(3), 33-48.
  • Haniffa, R. M., & Cooke, T. E. (2005). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391-430.
  • Heikkurinen, P., & Bonnedahl, K. J. (2013). Corporate responsibility for sustainable development: a review and conceptual comparison of market-and stakeholder-oriented strategies. Journal of Cleaner Production, 43, 191-198.
  • Hinson, R., Gyabea, A., & Ibrahim, M. (2015). Sustainability reporting among Ghanaian universities. Communication, 41(1), 22-42.
  • Hirschey, M., & Wichern, D. W. (1984). Accounting and market-value measures of profitability: Consistency, determinants, and uses. Journal of Business & Economic Statistics, 2(4), 375-383.
  • Jennifer Ho, L. C., & Taylor, M. E. (2007). An empirical analysis of triple-bottom-line reporting and its determinants: evidence from the United States and Japan. Journal of International Financial Management & Accounting, 18(2), 123-150.
  • Kühn, A. L., Stiglbauer, M., & Fifka, M. S. (2018). Contents and determinants of corporate social responsibility website reporting in SubSaharan Africa: A seven-country study. Business & Society, 57(3), 437-480.
  • Lichtenstein, S., Badu, E., Owusu-Manu, D. G., Edwards, D. J., & Holt, G. D. (2013). Corporate social responsibility architecture and project alignments. Journal of Engineering, Design and Technology, 11(3), 334 – 353
  • Lokuwaduge, C. S. D. S., & Heenetigala, K. (2017). Integrating environmental, social and governance (ESG) disclosure for sustainable development: An Australian study. Business Strategy and the Environment, 26(4), 438-450.
  • Mahmood, Z., Kouser, R., Ali, W., Ahmad, Z., & Salman, T. (2018). Does corporate governance affect sustainability disclosure? Mixed methods study. Sustainability, 10(1), 207.
  • Maignan, I., & Ferrell, O. C. (2001). Corporate citizenship as a marketing instrument - Concepts, evidence and research directions. European Journal of Marketing, 35(3/4), 457 – 484.
  • Marshall S, Brown DL. 2003. Corporate environmental reporting: What is in a metric. Business Strategy and the Environment, 12(3), 87– 106.
  • Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies? Journal of Business Ethics, 95(4), 571-601.
  • Nobanee, H., & Ellili, N. (2017). Does Risk Disclosure Reporting Quality Reduce Credit Risk?. Available at SSRN 2971474.
  • Nor, N. M., Bahari, N. A. S., Adnan, N. A., Kamal, S. M. Q. A. S., & Ali, I. M. (2016). The effects of environmental disclosure on financial performance in Malaysia. Procedia Economics and Finance, 35, 117-126.
  • Nyarku, K. M., & Hinson, R. E. (2017). Corporate social responsibility reporting of banks operating in Ghana. African Journal of Business Ethics, 11(2),122-131.
  • Poonawala, S. H., & Nagar, N. (2019). Gross profit manipulation through classification shifting. Journal of Business Research, 94, 81-88.
  • Roca, L. C., & Searcy, C. (2012). An analysis of indicators disclosed in corporate sustainability reports. Journal of Cleaner Production, 20(1), 103-118.
  • Rogers, A. D. (2016). Examining Small Business Adoption of Computerized Accounting Systems Using the Technology Acceptance Model (Doctoral dissertation, Walden University).
  • Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to a firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), 341- 350.
  • Sahore, N., & Verma, A. (2017). Corporate disclosures and financial performance of selected ındian manufacturing and non- manufacturing companies. Accounting and Finance Research, 6(1), 119. https://doi.org/10.5430/afr.v6n1p119
  • Sarumpaet, S. (2005). The relationship between environmental performance and financial performance of Indonesian companies. Jurnal Akuntansi dan Keuangan, 7(2), 89-98.
  • Schwartz, M. S., & Carroll, A. B. (2008). Integrating and unifying competing and complementary frameworks. Business & Society, 47(2), 148– 186.
  • Shrivastav, S. M., & Kalsie, A. (2017). The relationship between foreign ownership and firm performance in ındia: an empirical analysis. Artha Vijnana, 59(2), 152-162.
  • Solomon, J. (2004). Corporate Governance and Accountability. England: John Wiley and Sons.
  • Sulaiman, M., & Mokhtar, N. (2012). Ensuring sustainability: A preliminary study of environmental management accounting in Malaysia. International Journal of Business and Management Science, 5, 85-102.
  • Tagesson, T., Blank, V., Broberg, P., & Collin, S. O. (2009). What explains the extent and content of social and environmental disclosures on corporate websites: a study of social and environmental reporting in Swedish listed corporations. Corporate Social Responsibility and Environmental Management, 16(6), 352-364.
  • Unerman, J., & Chapman, C. (2014). Academic contributions to enhancing accounting for sustainable development. Accounting, Organizations and Society, 39(6), 385-394
Journal of Business Economics and Finance-Cover
  • Yayın Aralığı: Yılda 4 Sayı
  • Başlangıç: 2012
  • Yayıncı: PressAcademia
Arşiv
Sayıdaki Diğer Makaleler

Fatouma Ahmed IBRAHIM, Vahit Ferhan BENLI

Edward ATTAH-BOTCHWEY, Michael Gift SOKU, David Mensah AWADZIE

David Mensah AWADZIE, David Kwashie GARR, Thomas Dodzi TSOEKEKU

Anupam Das GUPTA, Afsana YESMIN

Samet GURSOY, Hilmi Tunahan AKKUS, Mesut DOGAN