TY - JOUR

T1 - Does the sustainability committee matter in the efficacy of sustainability reporting and firm performance?

AU - Shah, S.Q.A.

AU - Lai, F.W.

AU - Shad, M.K.

AU - Hamad, S.

AU - Tahir, M.

PY - 2024/10/10

Y1 - 2024/10/10

N2 - Owing to increasing pressures from diverse stakeholders, business entities have placed a heightened interest in sustainability reporting (SR). Presently, there is substantial discourse surrounding the effect of SR on an entity's financial performance (FP). Nevertheless, the nexus between SR and FP remains a topic of ongoing debate in business settings and academic discussion. The current study examines the effect of SR on FP of Malaysian oil and gas companies under the potential moderating influence of the sustainability committee (SC). A decade data (2012 to 2021) is collected from Malaysian oil and gas listed companies. The results revealed an adverse effect of social and environmental SR on return on assets (ROA), return on equity (ROE), and Tobin’s q (TQ). Notably, SC exhibited a positive moderating influence on the relationship between social and environmental SR with both ROA and TQ. However, the presence of SC exhibited a negative moderating influence on the association between environmental SR and ROE. The robustness of these findings is affirmed by applying GMM. This study contributes to the frontier of knowledge by examining the moderating effect of SC. Moreover, the findings offer crucial insights for managers and policymakers on the essential role of SR, and SC in a firm’s profitability.

AB - Owing to increasing pressures from diverse stakeholders, business entities have placed a heightened interest in sustainability reporting (SR). Presently, there is substantial discourse surrounding the effect of SR on an entity's financial performance (FP). Nevertheless, the nexus between SR and FP remains a topic of ongoing debate in business settings and academic discussion. The current study examines the effect of SR on FP of Malaysian oil and gas companies under the potential moderating influence of the sustainability committee (SC). A decade data (2012 to 2021) is collected from Malaysian oil and gas listed companies. The results revealed an adverse effect of social and environmental SR on return on assets (ROA), return on equity (ROE), and Tobin’s q (TQ). Notably, SC exhibited a positive moderating influence on the relationship between social and environmental SR with both ROA and TQ. However, the presence of SC exhibited a negative moderating influence on the association between environmental SR and ROE. The robustness of these findings is affirmed by applying GMM. This study contributes to the frontier of knowledge by examining the moderating effect of SC. Moreover, the findings offer crucial insights for managers and policymakers on the essential role of SR, and SC in a firm’s profitability.

U2 - 10.1007/s10668-024-05495-4

DO - 10.1007/s10668-024-05495-4

M3 - Journal article

JO - Environment, Development and Sustainability

JF - Environment, Development and Sustainability

SN - 1387-585X

ER -