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Sustainability reporting and bank performance after financial crisis

Sustainability reporting and bank performance after financial crisis This study aims to examine the relationship between sustainability reporting and bank performance after financial crisis in developed and developing countries.Design/methodology/approachThis study examines 882 banks from developed and developing countries covering 11 years after the 2008 financial crisis. The independent variable is environmental, social and governance (ESG) scores. The dependent variables are return on assets, return on equity and Tobin’s Q. This study uses bank- and country-specific control variables to measure the relationship between sustainability reporting and bank performance.FindingsThe findings deduced from the empirical results demonstrate that ESG improves banks’ accounting and market-based performance in developed countries, supporting value creation theory. Using pooling regression and instrumental variable – generalized method of moments, this study finds that ESG weakens banks’ performance in developed and developing countries.Originality/valueTo the best of the author’s knowledge, this is the first study to investigate and compare the impact of sustainability reporting on banks’ performance in developed and developing countries. The study found similarities in the impact of sustainability reporting and the improvement of banks’ current and future performance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Competitiveness Review: An International Business Journal incorporating Journal of Global Competitiveness Emerald Publishing

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1059-5422
DOI
10.1108/cr-04-2019-0040
Publisher site
See Article on Publisher Site

Abstract

This study aims to examine the relationship between sustainability reporting and bank performance after financial crisis in developed and developing countries.Design/methodology/approachThis study examines 882 banks from developed and developing countries covering 11 years after the 2008 financial crisis. The independent variable is environmental, social and governance (ESG) scores. The dependent variables are return on assets, return on equity and Tobin’s Q. This study uses bank- and country-specific control variables to measure the relationship between sustainability reporting and bank performance.FindingsThe findings deduced from the empirical results demonstrate that ESG improves banks’ accounting and market-based performance in developed countries, supporting value creation theory. Using pooling regression and instrumental variable – generalized method of moments, this study finds that ESG weakens banks’ performance in developed and developing countries.Originality/valueTo the best of the author’s knowledge, this is the first study to investigate and compare the impact of sustainability reporting on banks’ performance in developed and developing countries. The study found similarities in the impact of sustainability reporting and the improvement of banks’ current and future performance.

Journal

Competitiveness Review: An International Business Journal incorporating Journal of Global CompetitivenessEmerald Publishing

Published: May 25, 2021

Keywords: Developing countries; Developed countries; Sustainability reporting; ESG disclosure; Performance; Banks

References