Voluntary Disclosure of Non-Financial Information and its Association with Sustainability Performance

Rezaee, Z & Tuo, L. "Voluntary Disclosure of Non-Financial Information and its Association with Sustainability Performance" Advances in Accounting. Volume 39, December 2017, Pages 47-59

Posted: 30 Mar 2018

See all articles by Zabihollah Rezaee

Zabihollah Rezaee

University of Memphis - School of Accountancy

Date Written: March 24, 2018

Abstract

This paper investigates management incentives for disclosing voluntary non-financial information and whether such disclosure is associated with firms' environmental, social, and governance (ESG) sustainability performance. We hand-collect 580 sample firms' voluntary non-financial disclosure on product, competition, industry, customers, trends, and technology data from their annual reports in 2010. We find that information contents and managerial motivations play an important role in assessing the antecedents and consequences of non-financial disclosure. Specifically, we find that earnings quality is a more pronounced factor in influencing forward-looking non-financial disclosures whereas proprietary cost is a more pronounced factor in influencing historical nonfinancial disclosures. Using the ratings from the KLD database to construct ESG sustainability performance, we find a two-directional association between non-financial disclosures and sustainability performance. Specifically, forward-looking non-financial disclosures are associated with a one year lead in sustainability performance, whereas current year sustainability performance is linked to more disclosures of historical non-financial information in the year-end annual filings.

Keywords: Information asymmetry, Non-financial disclosures, Sustainability performance, Earnings quality

Suggested Citation

Rezaee, Zabihollah, Voluntary Disclosure of Non-Financial Information and its Association with Sustainability Performance (March 24, 2018). Rezaee, Z & Tuo, L. "Voluntary Disclosure of Non-Financial Information and its Association with Sustainability Performance" Advances in Accounting. Volume 39, December 2017, Pages 47-59. Available at SSRN: https://ssrn.com/abstract=3148745

Zabihollah Rezaee (Contact Author)

University of Memphis - School of Accountancy ( email )

Fogelman College of Business and Economics
Memphis, TN 38152-6460
United States
901-678-4652 (Phone)

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