The impact of sustainability accounting and reporti firm value: a case study of listed company’s on Lusaka securities exchange (LUSE).
Date
2024
Authors
Chinyonga, Hilton
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
There is a growing interest among stakeholders in the subject of Sustainability Accounting and Reporting (SAR). Literature based on SAR has reviewed that there exists a relationship between SAR practices and firm value. However, this has not been confirmed or verified. The aim of this research was to investigate the impact of SAR on firm value, focusing on companies listed on the Lusaka Securities Exchange (LuSE). Overall, the objective of this research is to
drive positive change, improve company performance, and ensure that companies operate in a socially, environmentally and economically responsible manner. This objective was achieved in three specific objectives firstly by examining the sustainability accounting and reporting practices among LuSE listed companies in Zambia, secondly by analyzing the relationship between SAR and firm value and lastly by identification of the key drivers to implementing SAR practices among LuSE listed companies. In doing so, the study adopted pragmatic philosophy and employed panel content analysis to examine the annual reports, separate
sustainability reports and websites of the companies listed on LUSE, analyzing data from 2012 to 2022 financial reporting period. The results revealed that the overall average sustainability index for 22 listed firms from 2012 to 2022 was found to be 48%. Whilst the overall average environmental sustainability index was found to be 44% and the overall average social sustainability index was found to be 42%. The results found that level of sustainability accounting and reporting practices has been increasing over the time from the last decade, however there has been gaps with regard to smaller firm which are still struggling with board presence and financial stamina. It was also found that SAR has impact of sustainability reporting on firm value and overall firm performance. A weak correlation was observed which is also significant tested at 5% level was found with R squared of 0.32. Thus, the findings indicate that weak association between the dependent variable ROA and the independent variables that is Environmental and social sustainability indicators. With overall mean of 0.164
and SD= 0.169. Based on the model, it was determined that Environmental and social sustainability indicators played a pivotal role in firm value. These results show that corporate sustainability reporting index has positive and significant impact on firm performance in Zambia. Specification tests concluded that FEM was the best method to interpret the association between sustainability disclosure and firm value. Thus, the R2 value apparent in Table 2 under the FEM is 19.54 percent. The coefficient of SR shows a positive and statistically significant effect on Tobin’s Q, under the FEM (p < 0.01) which implies SAR has a positive
effect on Firm value. SAR had positive impact on ROA which in turn also had positive influence on firm value at the level of 0.01 and 0.1 respectively. The main drivers of SAR practices were firm size, media visibility and ownership structure are the most important drivers of the disclosure of sustainability reports, while corporate governance only seems to have an influence on the existence of audit or sustainability committees. Therefore, it was recommended that there is need to educate and improve SAR awareness among LuSE listed companies and beyond in order to achieve sustainable development.
Description
Thesis of Master of Science in Accounting and Finance