Impact of Sustainability Reporting on the Firm Performance and Financial Decision Making with Special Reference to Material Sector in Sri Lanka
Keywords:
Economic disclosure, Environmental disclosure, Social Disclosure, Firm Performance, Return on Equity, Return on Assets, Financial Decision MakingAbstract
This study examines the impact of sustainability reporting on the firm performance and financial decision making within the material sector in Sri Lanka. Through quantitative analysis of data from a sample of listed material companies of eleven, correlations were found between disclosure practices and various financial indicators, including Return on Equity (ROE), Return on Assets (ROA) and Financial Decision Making (FDM). Through quantitative analysis of data, the results reveal that environmental disclosure has a significant negative effect on both Return on Assets (ROA) and Return on Equity (ROE) but Economic and social disclosures show insignificant relationships with ROA and ROE. Regarding financial decision making (FDM), economic and environmental disclosures both positively influence FDM, with environmental disclosure showing statistical significance, while social disclosure has a significant negative impact. These findings emphasize the significance of tarReceived: 11/07/2024 Revised: 15/09/2024 geted sustainability reporting to improve financial outcomes and strategic Accepted: 28/11/2024 Published: 12/12/2024 management by highlighting the complex and varied effects of various sustainability disclosures on firm performance and decision-making processes. The study offers recommendations for companies to enhance disclosure practices and identifies avenues for future research to address methodological limitations and explore emerging trends in disclosure practices.
