This study investigates the relationship between the level of sustainability reporting and sector's performance (operational, financial and market) in Middle East and North African countries (MENA) region.
Using data culled from 316 observations from seven different sectors located in 11 countries for 10 years (2008–2017), an independent variable derived from environmental, social and governance (ESG) score are regressed against dependent performance indicator variables (return on assets [ROA], return on equity [ROE] and Tobin's Q [TQ]). Two types of control variables complete the regression analysis in this study: firm-specific and macroeconomic.
The findings elicited from the empirical results that there are differences in the impact of sustainability reporting (ESG) on firm's operational performance (ROA), financial performance (ROE) and market performance (TQ) between the sectors in the MENA region.
The model in this study presents a valuable analytical framework for exploring sustainability reporting as a driver of performance in MENA economies. In addition, since this study contributes to the literature of sustainability accounting by a systematic depiction of cross-sectorial ESG reporting, this study establishes a benchmark to guide to firms wishing to adopt sustainability reporting.
