Advances in Management and Applied Economics

The Role of Corporate Governance Mechanism and Sustainability Reporting in Firm Performance: Evidence on Resource Based Sectors

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• Abstract

   

  In this study, a firm's performance is investigated in relation to the impact of corporate governance mechanisms and sustainability reporting. Content analysis is employed to evaluate and calculate a company's sustainability reporting by utilizing the disclosure of SDGs and external assurance in its sustainability report. CEO Duality, Insider Ownership, Board Size, Remuneration Committee, and Nomination Committee are the metrics used to evaluate corporate governance. In this study, the performance of 100 firms listed in the Fortune 500 in the industrials, materials, and energy sectors is evaluated over a five-year period (2019-2023) using Tobin's Q and return on assets. The effect of corporate governance mechanisms and sustainability reporting is determined through regression analysis, and the purposive sampling method is employed in this investigation. The findings of this study indicate that ROA and Tobin's Q are significantly and positively influenced by ownership concentration. The disclosure of SDGs has a detrimental impact on ROA. Still, it does not substantially impact Tobin's Q. The use of external assurance on a sustainability report, the CEO Duality, the Nomination committee, and the Remuneration committee have no impact on Tobin's Q or ROA. This study contributes to understanding corporate governance and sustainability's nuanced effects on firm performance, highlighting ownership concentration as a key driver and revealing contrasting impacts of sustainability disclosure.

   

  JEL classification numbers: L25, M14, Q56.

  Keywords: Corporate Governance, Sustainability Reporting, SDGs, Firm Performance.