Sustainability Reporting and Firm Financial Performance: A Review of Measurement Tactics
Mashiur Rahman,  Sarah Chowdhury
The relationship between sustainability reporting (SR) and firm financial performance (FFP) is an extensive empirical study. However, the evidence on the nature of the relationship is unclear. A commonly defined reason for divergent and contradictory results is measurement issues, which are related to two topics of interest. The purpose of this article is to evaluate alternative operation and measurement methods applied to the SR and FFP concepts in the empirical literature on SR-FFP relationships. Our study has come to different observations. First, SR's operations in the empirical literature range from multidimensional to one-dimensional. Second, SR measurement methods include sustainability indexes, content analyzes and single-dimensional measurements, while FFP measurement methods include market value of equity, accounting-based, market-based and composite measurements. Third, one SR measurement method is not harmful. In addition to the unique drawbacks of the approach, the two problems identified in most approaches are the subjectivity of the researcher and the selection anomalies that may influence the nature of the SR-FFP relationships identified in the empirical literature. Finally, possible ways of overcoming these disadvantages are recommended.
Keywords- Sustainability reporting, Firm financial performance, Accounting-based measurement, Market-based measurement, Global indices
Cite this Article
Mashiur Rahman,  Sarah Chowdhury,   "Sustainability Reporting and Firm Financial Performance: A Review of Measurement Tactics"
, International Journal of Engineering Development and Research (IJEDR), ISSN:2321-9939, Volume.7, Issue 4, pp.723-730, December 2019, Available at :http://www.ijedr.org/papers/IJEDR1904119.pdf