The Impact of Sustainability Disclosure on Performance of the Listed Companies on the Stock Exchange of Thailand

Abstract

          Sustainable business practices are one of ultimate goals of the business entities. Listed firms are usually required to report their firm performance as well as financial position in order to communicate firm endeavors to a wide range of stakeholders, including reporting of sustainability performance through annual report or a sustainability report. Reporting of sustainability is voluntary disclosure; consequently, this research is primarily concerned with examining the impact of sustainability disclosure and firm performance including sales, gross margin, net profit margin, return on asset and return on equity. Data was extracted from annual reports and sustainability reports of 716 firms excluding finance, banking, insurance and mutual funds companies on the Stock Exchange of Thailand for a period of three years from 2017 to 2019. A multi-regression analysis was used to test proposed hypotheses. Results indicate that there is a positive impact between sustainability disclosure-especially environmental issue, sales, gross margin ratio, net profit margin ratio, return on assets and return on equity. This implies that an increase in sustainability reporting results in heightened financial performance, confirming the importance of sustainability disclosure as a means of communication between firms and stakeholders which is consistent with Legitimacy Theory and Stakeholder Theory.