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Executive Summary
The purpose of this report is to give details on a professional project aimed at
investigating the impact of sustainability disclosures on market performance,
which is then elaborated into three research questions. The first question is
about the probability of issuing sustainability report among 50 constituent
stocks in Hong Kong’s Hang Seng Index (HSI). The second one is about the
connections between sustainability reports and the industry companies belong
to. The third one is about the links between sustainability reporting and market
performance.
Previous literature explained the existence of sustainability report by two sets
of theories. Social-political theories (political economy theory, stakeholder
theory and legitimacy theory) offer insights about companies facing social and
political pressures to provide environmentally information, which implies that
companies belong to environmentally sensitive industries are more likely to
deliver certain information. Voluntary disclosure theory suggested that superior
companies will provide information to distinguish with the inferior ones, which
infers that there is a correlation between sustainability information and market
performance.
Data collected in the companies’ websites to analyse the links between
sustainability reports, industry and market performance. The results is that
sustainability reports have significant relationships with industry and market
perception. This study concludes that disclosers outperform non-disclosers,
which may provide an insights for the managers of non-disclosing companies.
Commented [OM1]: Note the student immediately
launches into the overall aim of the project.
Commented [OM2]: There are some small English
language difficulties in the assignment, but in terms of the
core elements of a high quality student research project, this
paper is very well done.
Commented [OM3]: The student makes some effort to
link this project with a theoretical background. This is not
absolutely essential but it is one of the elements that leads
to this being a “high distinction” assignment.
Commented [OM4]: So a good executive study gives a hint
of how the data was collected and the results, as well as the
other elements (theoretical background, etc). This
executive summary is excellent.
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Table of Contents
1 Introduction ........................................................................................................... 3 1.1 Problem Statement ................................................................................... 3 1.2 Research aim and research questions .................................................. 4 2 Literature review .................................................................................................. 5 2.1 Sustainability report and its development ............................................. 5 2.2 Social-political theories ............................................................................ 5 2.3 Voluntary disclosure theory ..................................................................... 8 3 Methodology ....................................................................................................... 10 3.1 Data collection ......................................................................................... 10 3.2 Data analysis ........................................................................................... 10 3.2.1 Sustainability report ............................................................................ 11 3.2.2 Shareholder return, market perception and industry ..................... 11 4 Findings and analysis ....................................................................................... 12 4.1 Descriptive Statistics .............................................................................. 12 4.2 Bivariate Correlations ............................................................................. 14 4.3 Logistic Regression Results .................................................................. 15 5 Discussion .......................................................................................................... 16 5.1 H1: Sustainability reports are significantly related to the industry the company belongs to as implied in social-political theories ......................... 16 5.2 H2: Sustainability reports are significantly related to the shareholder returns (growth in earnings per share) as implied in voluntary disclosure theories H3: Sustainability reports are significantly related to the market perception (growth in year-end share price) as implied in voluntary disclosure theories. ........................................................................................... 17 6 Conclusion .......................................................................................................... 18 6.1 Addressing aims and research questions ........................................... 18 6.2 Limitations ................................................................................................ 19 6.3 Recommendations .................................................................................. 19 Reference ........................................................................................................... 22 Appendix: Logbook (Week 9 – Week 11) ...................................................... 25 Appendix: Results from SPSS ........................................................................ 27
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1 Introduction
Becoming a professional accountant is a career path in the future as a student
of Master of Professional Accounting. This topic is about sustainability report,
which is a trend for accounting professionals to prepare and assure
sustainability information to the public. At the first part of this report, it will
include background of the project, research aim and questions, and literature
review. In the other part, the methodology, finding, discussion and conclusion
will be explained and explored.
1.1 Problem Statement
For the last few decades, general public get more interests in the way of
companies performing business, and affecting the environment. This leads to a
new tendency of sustainability disclosures, or even a separate report called
sustainability report. This type of report issued by a company, which mentions
different impacts including the economic, environment and social, caused by its
daily activities (GRI n.d. b). There is no rules and regulations about
sustainability report. Sustainability disclosure is voluntary. 90% of Fortune 500
companies included sustainability as part of their companies’ strategy (Kotler
and Lee, 2004). Throughout these years, there is an incline in the coverage on
sustainability report which is for shareholders and other stakeholders (Cooper
& Owen, 2007, as cited in Carnevale & Mazzuca, 2014). There are positive
effects on society from sustainability reports (Karim, Suh, Carter, & Zhang,
2015), which leads to the same positive effects on companies. Recent
researches indicate that more disclosures have positive effects to
environmental performance (Clarkson, Li, Richardson and Vasvari 2004, as
Commented [OM5]: Generally non dated sources from
websites are NOT good sources. I would prefer to see peer
reviewed journal sources in these early sections. Some
professional and government sources (such as bureau of
statistics sources) is acceptable. This student has used far
more than the minimum required references. S/he has
done so because she NEEDED to to cover the topic properly.
S/he gets extra marks because of this.
Commented [OM6]: I generally prefer to see students use
original sources, not sources cited in other sources.
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cited in Elijido-Ten, 2011). However, there is not many discussions about the
impacts of sustainability disclosure on the market performance of individual
companies (Ilacqua, 2008).
Hong Kong, as an international financial centre, is a major office of many
companies and multinational corporations, which have engaged in
sustainability reporting (Sustainable Development Division n.d.). Some of the
corporations even adopted global guidelines to prepare sustainability reports
and seek external auditors to assure their sustainability reports (CPA Australia,
2013). It is critical to test if there is any relationship between sustainability
disclosures and market performance.
1.2 Research aim and research questions
The aim of this research is to identify the impact of sustainability disclosures on
market performance, and more specifically to:
Research questions
The following research questions are developed to achieve the aim.
To what extent does the sustainability reports available among 50
constituent stocks in Hong Kong’s Hang Seng Index (HSI)?
Any relationship between sustainability reporting and industry of the
organisations?
Do correlations exist between sustainability reporting and market
performance?
Commented [OM7]: IN the Executive Summary the
student used more formal expression, H1, H0 etc, which you
will recall from your BUSN20016 course. However, this is
acceptable. It’s good to see a formal stating of the research
hypotheses like this.
In fact looking ahead, the student has stated hypotheses
later.. I would prefer to see this section called ‘research
aims’.
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2 Literature review
2.1 Sustainability report and its development
In the past, accountants focused only on financial data and its accountability for
many years, the term ‘social accounting’ started to be discussed from the 1960s
(Drucker, 1965, as cited in Tilt, 2009, p. 12). At the same time, numerous
researches examined social and environment issues. The term Corporate
Social Responsibility (CSR) emerged eventually, and it is known as
sustainability report recently (Tilt, 2009). Until 1997, Global Reporting Initiative
(GRI) was founded in Boston to help governments, businesses and other
organisations in communicating the impact of daily activities on sustainability
issues (GRI, n.d. a). GRI also promotes its vision of making sustainability
reporting as routine and comparable as financial reporting (Tilt, 2009). A
number of studies in the past tried to find out reasons of sustainability
disclosures. Several theories mentioned in the previous studies, attempted to
explain the fast growing trends of sustainability reports by companies and
organisations.
2.2 Social-political theories
Social-political theories consist of political economy, legitimacy and stakeholder
theory. Unlike some previous economic theories, which focus on economic self
interest and wealth maximisation of an individual or corporation, political
economy theory is about political, social and institutional framework within
which the economic takes place (Omran and El-Galfy, 2014). This theory
demonstrates an important point that economic domain need to be studied
together with its political, social and institutional framework (Gray, Kouhy, and
Commented [OM8]: It’s possible to go from intro to lit
review and THEN go to research questions or research aims.
This student has chosen an alternative route.
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Lavers, 1995). While political economy theory is a background of social political
theory, which indicates public interest, stakeholder theory and legitimacy theory
focus more about the connection between the economy and the entire political,
social and institutional framework (Gray et al., 1995).
Stakeholder theory points out that company need stakeholder support and
approval in order to be able to survive (Omran and El-Galfy, 2014).
Stakeholders not only include shareholders, but also employees, customers,
media, suppliers, government and special interest groups (Carnevale and
Mazzuca, 2014). If the stakeholders are more powerful, company is more likely
to listen to their opinions. Sustainability disclosures act as a bridge between the
company and their stakeholders (Gray et al., 1995).
Legitimacy theory mentioned that companies need to react according to the
constraints imposed by social norms and values so that companies behave with
respect to the environment (Omran and El-Galfy, 2014). Sustainability
disclosure is to facilitate the perception of social image, which raises the
companies’ legitimacy and reputation (Michelon, 2011). Lindblom (1994, as
cited in Patten, 2002) indicated that companies choose to disclose in order to
inform the public about their changes in performance, alter perceptions about
the company, lead public to focus on the highlighted achievements, try to
change public expectations.
These overlapping theories (stakeholder theory and legitimacy theory), which
are set within the framework of political economy theory, suggest that
companies choose to disclosure more about their social and environmental
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performance because of social and political pressures, which is developed by
increased public interests (Patten, 2002). Elijido-Ten (2011) supported that
these theories implied that the more social and political pressure faced by
companies, the more likely the companies provide environmental disclosure.
Previous studies suggest industry and company size of the company are factors
which lead to more public concerns and pressure. Regarding Hong Kong
market, Gao, Heravi and Xiao (2005) analysed 154 annual reports of 33 listed
companies between 1993 and 1997 and discovered that the level of corporate
social and environmental disclosures and company size are positively related.
Tang and Chan (2010) provided results, which showed that companies with
larger total assets and more debts to equity published sustainability reports with
more information.
Elijido-Ten (2011) examined Australia’s Top 100 companies on their market
performance, sustainability and balanced scorecards (BSCs), company size
and industry and found out that disclosures are positively related to company
size and industry.
Based on the above theories and previous studies, the first hypothesis is
developed as follows:
H0: Sustainability reports are not significantly related to the industry the
company belongs to as implied in social-political theories.
H1: Sustainability reports are significantly related to the industry the company
belongs to as implied in social-political theories.
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2.3 Voluntary disclosure theory
Voluntary disclosure research first developed to discover the factors which drive
the differentiations in financial reporting quality (Healy, Hutton and Palepu, 1999,
as cited in Guidry and Patten, 2012). It then extended to the environmental
disclosure aspect. This theory suggests that there is a positive relationship
between performance in social and environmental issues and the level of
disclosure (Dye, 1985 and Verrecchia, 1983, as cited in Clarkson, Li,
Richardson, & Vasvari, 2008). Companies with good environmental
performance want to distinguish with those poor performing companies intend
to disclosure more about their social and environmental achievements (Elijido
Ten, 2011).
Some researchers studied on the relationships between sustainability
disclosure and environmental performance. Clarkson et al. (2008) found that
there is a positive relationship between the level of disclosure and
environmental performance with a sample of 191 companies in the US. Al
Tuwaijri, Christensen and Hughes (2004) also provided a similar results in their
research.
Some other studies focused on the associations between sustainability
disclosure and market performance based on the assumptions that companies,
which provide sustainability information should be those companies which
intend to differentiate themselves with inferior performing companies.
Carnevale and Mazzuca (2014) studied a sample of European banks and
concluded that investors value the sustainability information and provides a
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positive effect on stock prices. However, there is a negative impact on book
value per share and no significant effect on earnings per share. Elijido-Ten
(2011) examined Australia’s Top 100 companies on their market performance,
sustainability and balanced scorecards (BSCs), companies with disclosures
had a better performance in shareholder returns and market perception than
companies without disclosures.
Instead of focusing on sustainability reporting, Ilacqua (2008) examine the
effect of corporate social responsibility (CSR) activities on stock prices of 42
USA-based companies listed on NASDAQ Biotechnology Index. Activities
included human resources, environmental, customer and suppliers, corporate
giving, and corporate governance practices. Significant relationships existed
between stock prices and customers and suppliers, human resources and
corporate governance expense disclosures.
Based on the above theory and previous studies, the hypotheses are developed
as follows:
H0: Sustainability reports are not significantly related to the shareholder returns
(growth in earnings per share) as implied in voluntary disclosure theories.
H2: Sustainability reports are significantly related to the shareholder returns
(growth in earnings per share) as implied in voluntary disclosure theories.
H0: Sustainability reports are not significantly related to the market perception
(growth in year-end share price) as implied in voluntary disclosure theories.
H3: Sustainability reports are significantly related to the market perception
(growth in year-end share price) as implied in voluntary disclosure theories.
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3 Methodology
3.1 Data collection
The aim of this study is to determine if sustainability disclosure is related to
industry, shareholder return and market perception. This is an exploratory study
and based on secondary sources, which are publicly available written
documents. To be more precise, annual reports, sustainability reports and other
company documents of companies will be reviewed.
Hang Seng Index, which was publicly launched on 24 November 1969, is the
most broadly quoted indicator of the performance of Hong Kong stock market
(Hang Seng Indexes, n.d.). There are 50 constituent stocks in Hang Seng Index.
Data will be collected for 2013 and 2014 as 50 constituent stocks have not been
changed much in these two years. List of 50 constituent stocks can be obtained
in Hang Seng Index official website. List of constituent stocks as at 31
December 2013 is chosen. Annual reports and other documents provided to
stakeholders will be downloaded from company’s official websites.
3.2 Data analysis
Quantitative data, such as earnings per share and year-end share prices are
collected from annual reports and financial websites. Neuman (2004, as cited
in Ilacqua, 2008) mentioned that it is appropriate to use quantitative methods
for researches that measure facts on variables where reliability is important, a
large number of samples and data can be analysed statistically. They will be
analysed by using correlation and regression analysis, so as to find out the
relationship between sustainability reporting and market performance. Logistic
Commented [OM9]: WHIle I may not agree exactly with
the students approach, and it is not PERFECT, it’s a good
effort to make this research project truly a research project.
For example, I don’t think this is an exploratory study.
Page 11 of 29
regression is used when the dependent variable is discrete outcome (Sekaran
and Bougie, 2013). SPSS software is used to provide correlation and
regression analysis.
3.2.1 Sustainability report
The first part of this analysis is to find out which companies provide
sustainability reports. The data collection process is started by searching
sustainability reports in each company official website, Global Reporting
Initiative sustainability disclosure database and Google to find out if the
companies publish sustainability reports. Some companies publish standalone
reports and some companies include sustainability information in their annual
reports. Standalone reports include more information than annual report. Prior
researches demonstrate that there is a time lag between publishing
sustainability report and shareholders return (Crabtree and Debusk, 2008), so
companies which publish standalone report more than three years before 2013
are selected.
3.2.2 Shareholder return, market perception and industry
The analysis is that whether companies which provide sustainability report have
a better performance in shareholder returns and market perception than those
do not provide. To consistent with prior studies (Elijido-Ten, 2011), shareholder
returns are calculated by the growth of earnings per share. Earnings per share
of both 2013 and 2014 are collected from the annual reports of each companies
and growth rates are calculated.
Market perception is represented by the growth of year-end share price of the
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50 constituent stocks. Share prices as at year-end in 2013 and 2014 are
searched from finance websites, Yahoo! Finance. Growth rates are then
computed by comparing the figures of these two years.
To determine if there is relationship between industry and providing
sustainability information. It is necessary to identify the industry of each
company. Hang Seng Index has divided 50 constituent stocks into Finance,
Utilities, Properties and Commerce (Hang Seng Indexes, n.d.). However, these
industry classifications are not specific about sustainability disclosure. Prior
studies indicated that environmentally sensitive industries have more incentive
to provide sustainability information (Elijido-Ten, 2007). These industries are
those in mining and resources, building, energy, utilities, materials,
transportation and logistics (Elijido-Ten, 2007). All other industries are
considered as non-environmentally sensitive industries.
4 Findings and analysis
4.1 Descriptive Statistics
Within 50 constituent stocks, 35 of them provided standalone sustainability
reports in 2013. The earliest sustainability report was issued by MTR
Corporation in 2001. 9 of them started to publish standalone sustainability
reports within three years before 2013. Therefore, there are 26 companies
issued standalone sustainability reports for more than three years from 2013.
These three years, the number of companies in Hang Seng Index publishing
sustainability reports increased from 52% to 70%. This demonstrates the
importance of sustainability disclosures. Table 1 shows descriptive statistics.
Commented [OM10]: The student has attempted some
statistics. This is excellent. Just saying “this was higher
than that” is not very good. Students who do everything
else and when it comes to the findings just says “the
average scores were x” and “this seemed to be higher than
that”…will still pass.. But again, this is excellent.
Commented [OM11R10]:
Page 13 of 29
The descriptive statistics also show that only about 28% out of 50 sample
companies are classified as environmentally sensitive industries including
mining and resources, building, energy, utilities, materials, transportation and
logistics.
Table 1: Descriptive Statistics (Indicator Variables)
Variable Variable Description Number of company with 0
(%) Number of company with 1
(%)
Sustainability Report (SR)
Sustainability Report (SR) issued solely for more than three years from 2013 (Yes = 1 and No = 0)
24 48% 26 52%
Industry (IND)
Company in environmentally sensitive industry (i.e. mining and resources, building, energy, utilities, materials, transportation and logistics) (Yes = 1 and No = 0)
36 72% 14 28%
Growth of earnings per share (GEPS) and growth of year-end share price
(GYEP) are the continuous variables. The descriptive statistics of these two
variables are shown in Table 2. GEPS in 2014 has a minimum of -108.86% and
a maximum of 446.46%. The range of the growth in earnings per share is
555.32%. The mean and standard deviation of GEPS are 7.27% and 71.75%
respectively.
Growth in year-end share price in 2014 has a minimum of -46.34% and a
maximum of 34.98%. The range of the GYEP is 81.32%, which is lower than
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those of GEPS. The mean and standard deviation of GYEP are 1.9% and
18.08% respectively. This shows that both earnings per share and year-end
share price rose in 2014, and the rise in earnings per share is higher than the
rise in year-end share price. This also indicates that the volatility of growth in
earnings per share (GEPS) is higher than that of growth in year-end share year.
Table 2: Descriptive Statistics (Continuous Variables)
Variable Range Minimum Maximum Mean Standard Deviation Growth in Earnings Per Share for 2014 (GEPS) 555.32 -108.86 446.46 7.27 71.75 Growth in Year End Share Price for 2014 (GYEP) 81.32 -46.34 34.98 1.90 18.08
4.2 Bivariate Correlations
Table 3 shows the correlation matrix. The Pearson results show that the
sustainability report (SR) and industry (IND) are positively and significantly
correlated, with significance at p < 0.1. As for market performance, only
growth in year-end share price (GYEP) has a positively relationship with SR at
1% significant level. However, there is no significant relationship between SR
and growth in earnings per share. To check the correlations, non-parametric
Spearmen Rank correlation is also shown in Table 3. The significance levels
appear to coincide with the Pearson one. According to Tabachnik and Fidell,
2011 (as cited in Elijido-Ten, 2011), a harmful level of multicollinearity is not
present as no correlation coefficient is above 0.8.
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Table 3: Bivariate Correlation (N = 50)
SR IND GEPS GYEP
SR
Pearson
Sig. (2-tailed)
1 0.243*
0.090
0.227
0.112
0.374**
0.007
IND Pearson
Sig. (2-tailed)
0.243*
0.090
1 -0.100
0.488
-0.090
0.536
GEPS Pearson
Sig. (2-tailed)
0.227
0.112
-0.100
0.488
1 0.210
0.143
GYEP Pearson
Sig. (2-tailed)
0.374**
0.007
-0.090
0.536
0.210
0.143
1
*Correlation is significant at the 0.1 level. **Correlation is significant at the 0.01 level
4.3 Logistic Regression Results
Hypotheses H1 to H3 are tested by using logistic regressions. The dependant
variables are SR, which is whether the companies provided standalone
sustainability reports three years continuously before 2013. The independent
variables are industry that the companies belong to (IND), growth in earnings
per share (GEPS) and growth in year-end share price (GYEP). The regression
model estimation is presented in Table 4.
Table 4: Regression model (N = 50)
Estimate S.E. Wald df Sig.
IND -1.682 0.831 4.094 1 0.043
GEPS 0.009 0.011 0.716 1 0.397
GYEP 0.059 0.023 6.579 1 0.010
Constant 1.165 0.700 2.771 1 0.096
Commented [OM12]: Including regression results is really
impressive. The actual attempt to do real research in this
project is so good, that this study could form the basis (with
further development) for a peer-reviewed journal
article…and that’s excellent!
Page 16 of 29
The analyses show that industry (IND) is significantly related to SR, however,
the coefficient estimate sign is negative implying that non-environmentally
sensitive industries provide sustainability report. GYEP is positively and
significantly related to SR, while there is no significant correlation between
GEPS and SR.
5 Discussion
This section will compare the findings and literature review. The purpose of this
study was to examine if the market performance, as measured by growth in
earnings per share and growth in year-end share price, is associated with
sustainability disclosure provided in a sample of 50 companies being the
constituent stocks in Hang Seng Index between 2013 and 2014.
5.1 H1: Sustainability reports are significantly related to the
industry the company belongs to as implied in social
political theories
The findings show that sustainability disclosures increased within three years
before 2013. More than half of companies published standalone sustainability
reports. Both correlation and regression analyses indicate sustainability
disclosures has significant relationship with industry. However, regression
model contradicts with the claims made in the previous literature review. Social
political theories, which comprise political economy theory, stakeholder theory
and legitimacy theory, suggest that the willingness of disclosing environmental
information is based on the level of social and political pressure faced by the
companies. This implied that the environmentally sensitive companies have a
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higher chance to provide sustainability information, which is confirmed by the
findings. In contrast, regression model indicates that non-environmentally
sensitive companies have a higher chance to provide sustainability information.
5.2 H2: Sustainability reports are significantly related to the
shareholder returns (growth in earnings per share) as
implied in voluntary disclosure theories H3:
Sustainability reports are significantly related to the
market perception (growth in year-end share price) as
implied in voluntary disclosure theories.
The findings, confirm that sustainability reports are significantly related to
market perception, as measured by growth in year-end share price. This
reinforces that companies with better performance intend to provide more
information to maintain their superiority against non-disclosers, which is also
known as voluntary disclosure theory mentioned in the literature review. In
contrast, the findings do not provide sufficient evident to confirm that there are
associations between sustainability reports and shareholder returns, which is
demonstrated by earnings per share. These findings consistent with the results
from previous researches by Carnevale and Mazzuca (2014). They also
concluded that positive relationships exist between sustainability information
and stock prices, but not earnings per share. This may be because earnings
per share is a short term result, which depends on the performance of that
particular year (Carnevale and Mazzuca, 2014).
Commented [OM13]: This is excellent. The student is
linking the findings with previous literature. The literature
review should be looped back into the discussion section,
ideally.
Page 18 of 29
6 Conclusion
This section will address aims and research questions, point out the limitations
and recommendations.
6.1 Addressing aims and research questions
The aim of this research is to investigate the impact of sustainability disclosures
on market performance. Three research questions are provided to specifically
address to the aim.
First question is about the percentage of companies among 50 constituent
stocks in Hong Kong’s Hang Seng Index (HIS). The results show that as of
2013, there are 35 companies provided standalone sustainability reports, which
account for 70%. Out of these 35 companies, 26 of them had provided
standalone sustainability reports for more than three years before 2013, which
is 52%.
The second question is about the relationship between sustainability reports
and industry of the companies. The research results demonstrate a significant
and negative relationship between these two variables, which may infer that
social and political attention not only focus on environmentally sensitive
industries, but also non-environmentally sensitive industries. This result is
similar to those in previous studies by Elijido-Ten (2011).
The third question is about the correlations between sustainability reporting and
the market performance. The results partly support the positive relationship
between them. To be more specific, the data demonstrates that sustainability
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reporting is positively related to market perception, which is shown by growth
in year-end share price, while no significant correlation is found between
sustainability reporting and shareholder return, which is measured by growth in
earnings per share. This result is similar to those in previous studies by
Carnevale and Mazzuca (2014).
6.2 Limitations
The first limitation of this research is the sample size of 50 companies. Although,
according to Mundfrom, Shaw and Ke (2005), this is above the minimum
sample size with four variables, it is better to be recognised that this studies
may be focus on these 50 companies and may not be generalised to all other
companies.
The second limitation is that these 50 companies are all listed and mainly based
in Hong Kong. As a major international finance centre in Asia, many
multinational companies are listed in Hong Kong, and some of companies in
the sample operated or invested internationally, such as HSBC Holdings, AIA
Corporation. It is good to noted that this studies may be focus on Hong Kong
market and may not be generalised to other regions.
6.3 Recommendations
This sub-section will identify the recommendations for managers and
professionals as well as researchers.
As this project concludes that there is a significant relationship between
sustainability reporting and market perception, this may imply that potential
Commented [OM14]: Excellent recommendations. Note
how the student has again mixed in academic references.
Great work here.
Page 20 of 29
investors may seek more sustainability information. It is suggested that those
companies, which have not provide sustainability information to public, should
consider publishing this kind of information.
The findings confirm sustainability information is positively related to market
perception. However, unlike financial reports, there is no rule and regulation
about the quality of the sustainability report. Jaggi and Zhao (1996) indicated
that there was a gap between actual environmental disclosures and the
perceived importance of environmental disclosures. It is recommended that
those companies, which publish sustainability report annually, should
understand the expectation of stakeholders in order to improve their quality of
sustainability report.
As demonstrated above, sustainability reporting is important to companies.
Accounting professionals and accounting firms should be aware of the trends
and importance of sustainability reports. Wong, Wong, Li and Chen (2016)
indicated that companies chose from three types of providers, such as
accounting firms, non-accounting specialist consulting firms and non
accounting general consulting firms and concluded that larger firms tended to
hire accounting firms to add credibility to their sustainability reports.
As for researchers, as more companies start to prepare sustainability reports
annually, stakeholders’ expectation about sustainability reporting is also an
interesting topic for further studies.
This study focuses on Hong Kong. Some other studies focus on Australia
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(Elijido-Ten, 2007), the United Kingdom (Karim, Suh, Carter, & Zhang, 2015)
and the United States (Ilacqua, 2008), research in other regions, especially
those in Asia, is recommended to investigate if other regions have similar
results.
This study focuses on listed companies and, according to Studer, Tsang,
Welford and Hills (2008), small and medium-sized enterprises are not aware of
the importance of environmental impacts of the business. It is suggested that
further studies about the impact of sustainability information provided by small
and medium enterprises on market performance may be beneficial to the
managers of small and medium companies.
Page 22 of 29
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Carnevale, C., & Mazzuca, M. (2014). Sustainability Report and Bank Valuatio: Evidence from European Stock Markets, Business Ethics: A European Review, 23(1), 85-100.
Clarkson, P.M., Li, Y., Richardson, G.D. & Vasvari, F.P. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(4), 303-327.
CPA Australia. (2013). Sustainability Reporting: Practices, performance and potential. https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/prof essional-resources/sustainability/sustainability-reporting-practiceperformance-potential.pdf
Crabtree, A.D. & Debusk, G.K. (2008). The effects of adopting the Balanced Scorecard on shareholder returns. Advances in Accounting, Incorporating Advances in International Accounting, 24(1), 8-15.
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Appendix: Logbook (Week 9 – Week 11)
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Appendix: Results from SPSS Descriptive Statistics (Indicator Variables)
Sustainability Report
Frequency Percent Valid Percent
Cumulative Percent
Valid 0 24 48.0 48.0 48.0
1 26 52.0 52.0 100.0 Total 50 100.0 100.0
Industry
Frequency Percent Valid Percent
Cumulative Percent
Valid 0 36 72.0 72.0 72.0
1 14 28.0 28.0 100.0 Total 50 100.0 100.0
Descriptive Statistics (Continuous Variables)
Descriptive Statistics N Range Minimum Maximum Mean Std. Deviation
Growth in earnings per share
50 555.32347460 -108.86075950 446.46271510 7.2745128135 71.75260213010
Growth in year-end share price
50 81.31712150 -46.33967789 34.97744361 1.8964048705 18.08001736755 Valid N (listwise) 50
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Bivariate Correlation (N = 50)
Correlations
Sustainability Report Industry
Growth in earnings per share
Growth in yearend share price
Spearman's rho Sustainability Report Correlation Coefficient 1.000 .243 .227 .374**
Sig. (2-tailed) . .090 .112 .007
N 50 50 50 50
Industry Correlation Coefficient .243 1.000 -.100 -.090
Sig. (2-tailed) .090 . .488 .536
N 50 50 50 50
Growth in earnings per share Correlation Coefficient .227 -.100 1.000 .210
Sig. (2-tailed) .112 .488 . .143
N 50 50 50 50
Growth in year-end share price Correlation Coefficient .374** -.090 .210 1.000
Sig. (2-tailed) .007 .536 .143 .
N 50 50 50 50
**. Correlation is significant at the 0.01 level (2-tailed).
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Logistic regression model (N = 50)
Variables in the Equation B S.E. Wald df Sig. Exp(B)
Step 1a Industry(1) -1.682 .831 4.094 1 .043 .186
Growth in earnings per share .009 .011 .716 1 .397 1.010
Growth in year-end share price
.059 .023 6.579 1 .010 1.060
Constant 1.165 .700 2.771 1 .096 3.206
a. Variable(s) entered on step 1: Industry, Growth in earnings per share, Growth in year-end share price.