Journal of Emerging Trends in Economics and Management Sciences: Home

Article Title:
Sustainability Reporting and the Financial Performance of Banks in Africa
by Edward Attah-Botchwey (PhD), Michael Gift Soku and David Mensah Awadzie

Abstract:
This study examined the relationship between sustainability reporting and bank performance in Africa. Unlike previous studies that solely dwelled on accounting measures of performance, this study adopted both accounting (i.e., return on assets) and market-based measures of firm performance (i.e., Tobin's Q). The study relied on secondary data gathered from the audited financial statements of listed banks in Africa over ten years from 2010-2020. Notably, the financial statements of 20 listed banks (drawn from Ghana, Nigeria, and South Africa) were subjected to quantitative content analysis to quantify the extent of sustainability content. It was guided by the sustainability reporting framework developed by the global reporting initiative. The content analysis aims to identify and classify the extent to which firms report on Economic, governance, social, and environmental dimensions of sustainability. Besides, the financial statement figures aided the computation of a performance measure (return on assets and Tobin's Q) for the banks. The study utilised a panel fixed effect regression model to estimate the relationship between sustainability reporting and firm performance concerning data analysis. The results suggest that economic, social, and governance reporting of sustainability content (in the financial statement) has a significant positive association with Tobin's Q and Return on Assets (ROA). Furthermore, the study's findings suggest that banks ' reportage of environmental sustainability content significantly positively affects ROA. However, it has no significant effect on Tobin's Q. Generally, the study concludes that increased sustainability reporting enhances bank performance in the long term. Among others, the study recommends that policymakers develop a sustainability framework specific to the banking industry's needs.

Keywords: Examined, Sustainability, Environmental, Return on Assets, Bank performance

Download full paper