Effect Of Sustainability Reporting On Financial Performance Of Listed Financial Institutions In Ghana

Abstract

This research examines how reporting on sustainability affects Financial Performance of Listed Financial Institutions in Ghana. The study analyzed 12 sampled firms in Ghana from 2012-2021. Sustainability Reporting was measured using Global Reporting Initiative, Financial Services Sector Disclosure guidelines, while Firm Performance was measured using Return on Assets. The study used a cross-sectional design and quantitative research approach, employing the linear regression ordinary least square estimation technique for analysis. The results showed a significant positive relationship between Economic Disclosure Scores and the Financial Performance. The Environmental Disclosure Scores showed a positive insignificant effect on Financial Performance. The study found a negative insignificant relationship between Social Disclosure Scores and Financial Performance, with higher reporting for Economic Disclosure Scores, Social Disclosure Scores, and Environmental Disclosure Scores respectively. The study examined the restraining effects of Firm Size and Debt Ratio on the relationship between Sustainability Reporting and Financial Performance. The results showed a negative significant relationship between Debt Ratio and Financial Performance, while the relationship between Firm Size and Sustainability Reporting was positive but nonsignificant. The study recommends that financial institutions in Ghana adopt the Global Reporting Initiative content index template to disclose Sustainability Reporting. Also, Government of Ghana should establish an awarding scheme for firms that disclose sustainability information. Lastly, the study offers proof of the topic in scholarly works, especially in Africa, using data from Ghana.