The Effect of Sustainability Report Disclosure on Corporate Financial Profitability
Keywords:
Disclosure, Financial performance, Global Reporting Initiative, Product responsibility, Sustainability reportAbstract
The issue of sustainability report disclosure has been expanding rapidly, and previous studies on this topic have produced mixed findings. A sustainability report is a non-financial disclosure that consists of six performance elements: economic, environmental, human rights, labor practices and decent work, social, and product responsibility. This study aims to examine the relationship between the disclosure of sustainability report elements and corporate financial performance. The sample consists of 13 companies that received the Indonesia Sustainability Reporting Award (ISRA) over five periods, from 2009 to 2013. The independent variables are the disclosures of economic, environmental, human rights, labor practices and decent work, social, and product responsibility performance, measured using a disclosure index. The Sustainability Reporting Guidelines version 3.0 issued by the Global Reporting Initiative (GRI) are used as the basis for calculating the disclosure index. The dependent variable is Return on Assets (ROA), which represents financial performance. This study uses secondary data collected from company reports and the ISRA website. The results show that only the disclosure of product responsibility performance significantly affects corporate financial performance.
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