SUSTAINABILITY ACCOUNTING AND INTEGRATED REPORTING: EXAMINING THE IMPACT ON CORPORATE GOVERNANCE AND INVESTOR DECISION-MAKING
Keywords:
Sustainability Accounting, Integrated Reporting, Corporate Governance, ESG Disclosure, Investor Decision-MakingAbstract
This study examines the impact of sustainability accounting and Integrated Reporting (IR) on corporate governance quality and investor decision-making. As stakeholder demand for transparency and long-term value creation intensifies, firms increasingly integrate environmental, social, and governance (ESG) information into their reporting frameworks. Using panel data comprising 700 firm-year observations from 2015 to 2021, this study employs fixed and random effects regression models to analyze the relationships among sustainability performance, ESG disclosure, IR adoption, governance quality, investor confidence, and market returns. The results reveal that sustainability performance and ESG disclosure are positively associated with corporate governance quality. Furthermore, firms adopting Integrated Reporting demonstrate significantly higher investor confidence compared to non-adopters. Governance quality is positively related to both investor confidence and market return, indicating that strong oversight mechanisms translate into favorable capital market outcomes. Mediation analysis confirms that governance quality partially mediates the relationship between sustainability performance and investor confidence, highlighting governance as a structural channel through which sustainability initiatives influence investor perceptions. Trend analysis further shows consistent improvements in sustainability and governance indicators over time. Overall, the findings suggest that sustainability accounting and Integrated Reporting are not merely symbolic disclosures but strategic mechanisms that enhance governance effectiveness and strengthen investor trust, thereby contributing to improved market performance and long-term value creation.
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