COMPARATIVE STUDY ON THE IMPACT OF SUSTAINABILITY REPORTING PRACTICES ON FIRM PERFORMANCE IN LISTED FOOD, BEVERAGE, TOBACCO, FINANCE AND CAPITAL GOODS COMPANIES IN SRI LANKA

Abstract

Sustainability Reporting plays a crucial role in the business world nowadays due to its benefits to different parties; it consists mainly of economic, social, and environmental disclosures. This study's main purpose is to evaluate the impact of sustainability reporting on the firm performance of the listed Food, Beverage, Tobacco, and capital goods industries and the finance industry. To determine the impact of sustainability reporting practices on firm performance, consider the sample of 36 CSE-listed companies in these two selected industries from 2017 to 2023. To measure the independent variable of sustainability reporting, implied economic disclosures, environmental disclosures, and social disclosures, while ROA and ROE are used to measure the dependent variable of the firm's financial performance. The panel regression model was mainly used to test the hypotheses of this study. As per the tests, results for the beverage, tobacco, and capital goods industries suggest that economic disclosures have a positive and significant impact on firm performance measured by both ROA and ROE, while environmental disclosures show a negative and insignificant impact, and social disclosure shows a positive and insignificant impact on the firm performances. Further, the finance industry results show that environmental sustainability reporting has a significant impact on ROA, and social sustainability reporting has a significant negative impact on ROE. Economic sustainability reporting showed no significant relationship with either metric. Further findings reveal that Sri Lankan sustainability reporting practices are not up to the admirable level when compared with the other countries; however, they further found that Sri Lankan sustainability reporting practices have improved throughout the period compared to the previous years.