The strategic value of sustainability and its disclosure : Three essays on the Impact of Sustainability Performance, Disclosure & Reputation on Firms’ Financial Performance

Abstract : The signaling perspective argues that when a firm limits the extent of its sustainability disclosure, it prevents stakeholders from evaluating its achieved degree of sustainability performance, and may thus reach higher financial returns. However, transparency is an institutionalized norm that stakeholders value, and firms may not be able to limit their disclosure without being penalized. This thesis therefore raises the question of whether firms can strategically limit their sustainability disclosure to reach higher profits, or if pressure for conformity to the norm of transparency exists and weakens such strategies. Using econometrical methods, this thesis empirically shows that sustainability raters do not converge in their assessment of firms’ sustainability performance, supporting the assumption that firmsmay prevent stakeholders from evaluating their actual degree of sustainability. It also shows that less sustainable and more reputed firms are more likely to limit their sustainability disclosure, that highly sustainable firms encounter higher short and long term financial returns when they adopt an extensive disclosure, and that less sustainable firms, on the contrary are more profitable in the short term when theylimit their disclosure. This thesis therefore shows that in line with the signaling perspective, firms may strategically adjust the extent on their disclosure to reach higher returns in the short term. However, in the long term, normative pressure for transparency is too high and weakens the benefits of such strategies.
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Samuel Touboul. The strategic value of sustainability and its disclosure : Three essays on the Impact of Sustainability Performance, Disclosure & Reputation on Firms’ Financial Performance. Business administration. HEC, 2013. English. ⟨NNT : 2013EHEC0004⟩. ⟨tel-01246698⟩

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