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BUSN20019 Professional Project
Assignment 2
Project Report
The impact of sustainability disclosures on market
performance: evidence from 50 constituent stocks in Hong
Kong’s Hang Seng Index (HSI)
Prepared by
Student ID: xxxxx
Student Name: xxxxx
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Executive Summary
The purpose of this report is to give details on a professional project aimed at
investigating the impact of sustainability disclosures on market performance,
which is then elaborated into three research questions. The first question is
about the probability of issuing sustainability report among 50 constituent
stocks in Hong Kong’s Hang Seng Index (HSI). The second one is about the
connections between sustainability reports and the industry companies belong
to. The third one is about the links between sustainability reporting and market
performance.
Previous literature explained the existence of sustainability report by two sets
of theories. Social-political theories (political economy theory, stakeholder
theory and legitimacy theory) offer insights about companies facing social and
political pressures to provide environmentally information, which implies that
companies belong to environmentally sensitive industries are more likely to
deliver certain information. Voluntary disclosure theory suggested that superior
companies will provide information to distinguish with the inferior ones, which
infers that there is a correlation between sustainability information and market
performance.
Data collected in the companies’ websites to analyse the links between
sustainability reports, industry and market performance. The results is that
sustainability reports have significant relationships with industry and market
perception. This study concludes that disclosers outperform non-disclosers,
which may provide an insights for the managers of non-disclosing companies.
Comment [OM1]: Note the student
immediately launches into the overall
aim of the project.
Comment [OM2]: There are some
small English language difficulties in
the assignment, but in terms of the
core elements of a high quality
student research project, this paper is
very well done.
Comment [OM3]: The student
makes some effort to link this project
with a theoretical background. This
is not absolutely essential but it is one
of the elements that leads to this
being a “high distinction” assignment.
Comment [OM4]: So a good
executive study gives a hint of how the
data was collected and the results, as
well as the other elements (theoretical
background, etc). This executive
summary is excellent.
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Table of Contents
1 Introduction……………………………………………………………………………………………..4
1.1 Problem Statement………………………………………………………………………..4
1.2 Research aim and research questions…………………………………………..5
2 Literature review……………………………………………………………………………………..6
2.1 Sustainability report and its development ………………………………………6
2.2 Social-political theories ………………………………………………………………….6
2.3 Voluntary disclosure theory ……………………………………………………………9
3 Methodology………………………………………………………………………………………….11
3.1 Data collection……………………………………………………………………………..11
3.2 Data analysis ……………………………………………………………………………….11
3.2.1 Sustainability report ………………………………………………………………….12
3.2.2 Shareholder return, market perception and industry…………………12
4 Findings and analysis ……………………………………………………………………………13
4.1 Descriptive Statistics ……………………………………………………………………13
4.2 Bivariate Correlations…………………………………………………………………..15
4.3 Logistic Regression Results…………………………………………………………16
5 Discussion …………………………………………………………………………………………….17
5.1 H1: Sustainability reports are significantly related to the industry the
company belongs to as implied in social-political theories…………………….17
5.2 H2: Sustainability reports are significantly related to the shareholder
returns (growth in earnings per share) as implied in voluntary disclosure
theories H3: Sustainability reports are significantly related to the market
perception (growth in year-end share price) as implied in voluntary
disclosure theories.……………………………………………………………………………….18
6 Conclusion…………………………………………………………………………………………….19
6.1 Addressing aims and research questions…………………………………….19
6.2 Limitations……………………………………………………………………………………20
6.3 Recommendations……………………………………………………………………….20
Reference……………………………………………………………………………………………..23
Appendix: Logbook (Week 9 – Week 11) ……… Error! Bookmark not defined.
Appendix: Results from SPSS ………………………………………………………………26
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1 Introduction
Becoming a professional accountant is a career path in the future as a student
of Master of Professional Accounting. This topic is about sustainability report,
which is a trend for accounting professionals to prepare and assure
sustainability information to the public. At the first part of this report, it will
include background of the project, research aim and questions, and literature
review. In the other part, the methodology, finding, discussion and conclusion
will be explained and explored.
1.1 Problem Statement
For the last few decades, general public get more interests in the way of
companies performing business, and affecting the environment. This leads to
a new tendency of sustainability disclosures, or even a separate report called
sustainability report. This type of report issued by a company, which mentions
different impacts including the economic, environment and social, caused by
its daily activities (GRI n.d. b). There is no rules and regulations about
sustainability report. Sustainability disclosure is voluntary. 90% of Fortune 500
companies included sustainability as part of their companies’ strategy (Kotler
and Lee, 2004). Throughout these years, there is an incline in the coverage on
sustainability report which is for shareholders and other stakeholders (Cooper
& Owen, 2007, as cited in Carnevale & Mazzuca, 2014). There are positive
effects on society from sustainability reports (Karim, Suh, Carter, & Zhang,
2015), which leads to the same positive effects on companies. Recent
researches indicate that more disclosures have positive effects to
environmental performance (Clarkson, Li, Richardson and Vasvari 2004, as
Comment [OM5]: Generally non
dated sources from websites are NOT
good sources. I would prefer to see
peer-reviewed journal sources in
these early sections. Some
professional and government sources
(such as bureau of statistics sources) is
acceptable. This student has used far
more than the minimum required
references. S/he has done so
because she NEEDED to to cover the
topic properly. S/he gets extra marks
because of this.
Comment [OM6]: I generally prefer
to see students use original sources,
not sources cited in other sources, but
still, this is carefully and correctly
referenced.
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cited in Elijido-Ten, 2011). However, there is not many discussions about the
impacts of sustainability disclosure on the market performance of individual
companies (Ilacqua, 2008).
Hong Kong, as an international financial centre, is a major office of many
companies and multinational corporations, which have engaged in
sustainability reporting (Sustainable Development Division n.d.). Some of the
corporations even adopted global guidelines to prepare sustainability reports
and seek external auditors to assure their sustainability reports (CPA Australia,
2013). It is critical to test if there is any relationship between sustainability
disclosures and market performance.
1.2 Research aim and research questions
The aim of this research is to identify the impact of sustainability disclosures on
market performance, and more specifically to:
Research questions
The following research questions are developed to achieve the aim.
To what extent does the sustainability reports available among 50
constituent stocks in Hong Kong’s Hang Seng Index (HSI)?
Any relationship between sustainability reporting and industry of the
organisations?
Do correlations exist between sustainability reporting and market
performance?
Comment [OM7]: IN the Executive
Summary the student used more
formal expression, H1, H0 etc, which
you will recall from your BUSN20016
course. However, this is acceptable.
It’s good to see a formal stating of the
research hypotheses like this.
In fact looking ahead, the student has
stated hypotheses later.. I would
prefer to see this section called
‘research aims’.
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2 Literature review
2.1 Sustainability report and its development
In the past, accountants focused only on financial data and its accountability
for many years, the term ‘social accounting’ started to be discussed from the
1960s (Drucker, 1965, as cited in Tilt, 2009, p. 12). At the same time,
numerous researches examined social and environment issues. The term
Corporate Social Responsibility (CSR) emerged eventually, and it is known as
sustainability report recently (Tilt, 2009). Until 1997, Global Reporting Initiative
(GRI) was founded in Boston to help governments, businesses and other
organisations in communicating the impact of daily activities on sustainability
issues (GRI, n.d. a). GRI also promotes its vision of making sustainability
reporting as routine and comparable as financial reporting (Tilt, 2009). A
number of studies in the past tried to find out reasons of sustainability
disclosures. Several theories mentioned in the previous studies, attempted to
explain the fast growing trends of sustainability reports by companies and
organisations.
2.2 Social-political theories
Social-political theories consist of political economy, legitimacy and
stakeholder theory. Unlike some previous economic theories, which focus on
economic self-interest and wealth maximisation of an individual or corporation,
political economy theory is about political, social and institutional framework
within which the economic takes place (Omran and El-Galfy, 2014). This
theory demonstrates an important point that economic domain need to be
studied together with its political, social and institutional framework (Gray,
Comment [OM8]: It’s possible to go
from intro to lit review and THEN go to
research questions or research aims.
This student has chosen an alternative
route.
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Kouhy, and Lavers, 1995). While political economy theory is a background of
social political theory, which indicates public interest, stakeholder theory and
legitimacy theory focus more about the connection between the economy and
the entire political, social and institutional framework (Gray et al., 1995).
Stakeholder theory points out that company need stakeholder support and
approval in order to be able to survive (Omran and El-Galfy, 2014).
Stakeholders not only include shareholders, but also employees, customers,
media, suppliers, government and special interest groups (Carnevale and
Mazzuca, 2014). If the stakeholders are more powerful, company is more likely
to listen to their opinions. Sustainability disclosures act as a bridge between
the company and their stakeholders (Gray et al., 1995).
Legitimacy theory mentioned that companies need to react according to the
constraints imposed by social norms and values so that companies behave
with respect to the environment (Omran and El-Galfy, 2014). Sustainability
disclosure is to facilitate the perception of social image, which raises the
companies’ legitimacy and reputation (Michelon, 2011). Lindblom (1994, as
cited in Patten, 2002) indicated that companies choose to disclose in order to
inform the public about their changes in performance, alter perceptions about
the company, lead public to focus on the highlighted achievements, try to
change public expectations.
These overlapping theories (stakeholder theory and legitimacy theory), which
are set within the framework of political economy theory, suggest that
companies choose to disclosure more about their social and environmental
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performance because of social and political pressures, which is developed by
increased public interests (Patten, 2002). Elijido-Ten (2011) supported that
these theories implied that the more social and political pressure faced by
companies, the more likely the companies provide environmental disclosure.
Previous studies suggest industry and company size of the company are
factors which lead to more public concerns and pressure. Regarding Hong
Kong market, Gao, Heravi and Xiao (2005) analysed 154 annual reports of 33
listed companies between 1993 and 1997 and discovered that the level of
corporate social and environmental disclosures and company size are
positively related.
Tang and Chan (2010) provided results, which showed that companies with
larger total assets and more debts to equity published sustainability reports
with more information.
Elijido-Ten (2011) examined Australia’s Top 100 companies on their market
performance, sustainability and balanced scorecards (BSCs), company size
and industry and found out that disclosures are positively related to company
size and industry.
Based on the above theories and previous studies, the first hypothesis is
developed as follows:
H0: Sustainability reports are not significantly related to the industry the
company belongs to as implied in social-political theories.
H1: Sustainability reports are significantly related to the industry the company
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belongs to as implied in social-political theories.
2.3 Voluntary disclosure theory
Voluntary disclosure research first developed to discover the factors which
drive the differentiations in financial reporting quality (Healy, Hutton and
Palepu, 1999, as cited in Guidry and Patten, 2012). It then extended to the
environmental disclosure aspect. This theory suggests that there is a positive
relationship between performance in social and environmental issues and the
level of disclosure (Dye, 1985 and Verrecchia, 1983, as cited in Clarkson, Li,
Richardson, & Vasvari, 2008). Companies with good environmental
performance want to distinguish with those poor performing companies intend
to disclosure more about their social and environmental achievements
(Elijido-Ten, 2011).
Some researchers studied on the relationships between sustainability
disclosure and environmental performance. Clarkson et al. (2008) found that
there is a positive relationship between the level of disclosure and
environmental performance with a sample of 191 companies in the US.
Al-Tuwaijri, Christensen and Hughes (2004) also provided a similar results in
their research.
Some other studies focused on the associations between sustainability
disclosure and market performance based on the assumptions that companies,
which provide sustainability information should be those companies which
intend to differentiate themselves with inferior performing companies.
Carnevale and Mazzuca (2014) studied a sample of European banks and
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concluded that investors value the sustainability information and provides a
positive effect on stock prices. However, there is a negative impact on book
value per share and no significant effect on earnings per share. Elijido-Ten
(2011) examined Australia’s Top 100 companies on their market performance,
sustainability and balanced scorecards (BSCs), companies with disclosures
had a better performance in shareholder returns and market perception than
companies without disclosures.
Instead of focusing on sustainability reporting, Ilacqua (2008) examine the
effect of corporate social responsibility (CSR) activities on stock prices of 42
USA-based companies listed on NASDAQ Biotechnology Index. Activities
included human resources, environmental, customer and suppliers, corporate
giving, and corporate governance practices. Significant relationships existed
between stock prices and customers and suppliers, human resources and
corporate governance expense disclosures.
Based on the above theory and previous studies, the hypotheses are
developed as follows:
H0: Sustainability reports are not significantly related to the shareholder
returns (growth in earnings per share) as implied in voluntary disclosure
theories.
H2: Sustainability reports are significantly related to the shareholder returns
(growth in earnings per share) as implied in voluntary disclosure theories.
H0: Sustainability reports are not significantly related to the market perception
(growth in year-end share price) as implied in voluntary disclosure theories.
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H3: Sustainability reports are significantly related to the market perception
(growth in year-end share price) as implied in voluntary disclosure theories.
3 Methodology
3.1 Data collection
The aim of this study is to determine if sustainability disclosure is related to
industry, shareholder return and market perception. This is an exploratory
study and based on secondary sources, which are publicly available written
documents. To be more precise, annual reports, sustainability reports and
other company documents of companies will be reviewed.
Hang Seng Index, which was publicly launched on 24 November 1969, is the
most broadly quoted indicator of the performance of Hong Kong stock market
(Hang Seng Indexes, n.d.). There are 50 constituent stocks in Hang Seng
Index. Data will be collected for 2013 and 2014 as 50 constituent stocks have
not been changed much in these two years. List of 50 constituent stocks can
be obtained in Hang Seng Index official website. List of constituent stocks as at
31 December 2013 is chosen. Annual reports and other documents provided
to stakeholders will be downloaded from company’s official websites.
3.2 Data analysis
Quantitative data, such as earnings per share and year-end share prices are
collected from annual reports and financial websites. Neuman (2004, as cited
in Ilacqua, 2008) mentioned that it is appropriate to use quantitative methods
for researches that measure facts on variables where reliability is important, a
large number of samples and data can be analysed statistically. They will be
Comment [OM9]: WHIle I may not
agree exactly with the students
approach, and it is not PERFECT, it’s a
good effort to make this research
project truly a research project. For
example, I don’t think this is an
exploratory study.
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analysed by using correlation and regression analysis, so as to find out the
relationship between sustainability reporting and market performance. Logistic
regression is used when the dependent variable is discrete outcome (Sekaran
and Bougie, 2013). SPSS software is used to provide correlation and
regression analysis.
3.2.1Sustainability report
The first part of this analysis is to find out which companies provide
sustainability reports. The data collection process is started by searching
sustainability reports in each company official website, Global Reporting
Initiative sustainability disclosure database and Google to find out if the
companies publish sustainability reports. Some companies publish standalone
reports and some companies include sustainability information in their annual
reports. Standalone reports include more information than annual report. Prior
researches demonstrate that there is a time lag between publishing
sustainability report and shareholders return (Crabtree and Debusk, 2008), so
companies which publish standalone report more than three years before 2013
are selected.
3.2.2Shareholder return, market perception and industry
The analysis is that whether companies which provide sustainability report
have a better performance in shareholder returns and market perception than
those do not provide. To consistent with prior studies (Elijido-Ten, 2011),
shareholder returns are calculated by the growth of earnings per share.
Earnings per share of both 2013 and 2014 are collected from the annual
reports of each companies and growth rates are calculated.
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Market perception is represented by the growth of year-end share price of the
50 constituent stocks. Share prices as at year-end in 2013 and 2014 are
searched from finance websites, Yahoo! Finance. Growth rates are then
computed by comparing the figures of these two years.
To determine if there is relationship between industry and providing
sustainability information. It is necessary to identify the industry of each
company. Hang Seng Index has divided 50 constituent stocks into Finance,
Utilities, Properties and Commerce (Hang Seng Indexes, n.d.). However, these
industry classifications are not specific about sustainability disclosure. Prior
studies indicated that environmentally sensitive industries have more incentive
to provide sustainability information (Elijido-Ten, 2007). These industries are
those in mining and resources, building, energy, utilities, materials,
transportation and logistics (Elijido-Ten, 2007). All other industries are
considered as non-environmentally sensitive industries.
4 Findings and analysis
4.1 Descriptive Statistics
Within 50 constituent stocks, 35 of them provided standalone sustainability
reports in 2013. The earliest sustainability report was issued by MTR
Corporation in 2001. 9 of them started to publish standalone sustainability
reports within three years before 2013. Therefore, there are 26 companies
issued standalone sustainability reports for more than three years from 2013.
These three years, the number of companies in Hang Seng Index publishing
Comment [OM10]: The student
has attempted some statistics. This
is excellent. Just saying “this was
higher than that” is not very good.
Students who do everything else and
when it comes to the findings just
says “the average scores were x” and
“this seemed to be higher than
that”…will still pass.. But again,
this is excellent.
Comment [OM11]:
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sustainability reports increased from 52% to 70%. This demonstrates the
importance of sustainability disclosures. Table 1 shows descriptive statistics.
The descriptive statistics also show that only about 28% out of 50 sample
companies are classified as environmentally sensitive industries including
mining and resources, building, energy, utilities, materials, transportation and
logistics.
Table 1: Descriptive Statistics (Indicator Variables)
Variable
Variable Description
Number of
company
with 0
(%)
Number of
company
with 1
(%)
Sustainability
Report (SR)
Sustainability Report (SR) issued
solely for more than three years
from 2013 (Yes = 1 and No = 0)
24
48%
26
52%
Industry
(IND)
Company in environmentally
sensitive industry (i.e. mining and
resources, building, energy,
utilities, materials, transportation
and logistics) (Yes = 1 and No =
0)
36
72%
14
28%
Growth of earnings per share (GEPS) and growth of year-end share price
(GYEP) are the continuous variables. The descriptive statistics of these two
variables are shown in Table 2. GEPS in 2014 has a minimum of -108.86%
and a maximum of 446.46%. The range of the growth in earnings per share is
555.32%. The mean and standard deviation of GEPS are 7.27% and 71.75%
respectively.
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Growth in year-end share price in 2014 has a minimum of -46.34% and a
maximum of 34.98%. The range of the GYEP is 81.32%, which is lower than
those of GEPS. The mean and standard deviation of GYEP are 1.9% and
18.08% respectively. This shows that both earnings per share and year-end
share price rose in 2014, and the rise in earnings per share is higher than the
rise in year-end share price. This also indicates that the volatility of growth in
earnings per share (GEPS) is higher than that of growth in year-end share
year.
Table 2: Descriptive Statistics (Continuous Variables)
Variable
Range
Minimum
Maximum
Mean
Standard
Deviation
Growth in Earnings Per
Share for 2014 (GEPS)
555.32
-108.86
446.46
7.27
71.75
Growth in Year End
Share Price for 2014
(GYEP)
81.32
-46.34
34.98
1.90
18.08
4.2 Bivariate Correlations
Table 3 shows the correlation matrix. The Pearson results show that the
sustainability report (SR) and industry (IND) are positively and significantly
correlated, with significance at p < 0.1. As for market performance, only growth
in year-end share price (GYEP) has a positively relationship with SR at 1%
significant level. However, there is no significant relationship between SR and
growth in earnings per share. To check the correlations, non-parametric
Spearmen Rank correlation is also shown in Table 3. The significance levels
appear to coincide with the Pearson one. According to Tabachnik and Fidell,
2011 (as cited in Elijido-Ten, 2011), a harmful level of multicollinearity is not
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present as no correlation coefficient is above 0.8.
Table 3: Bivariate Correlation (N = 50)
SR
IND
GEPS
GYEP
SR
Pearson
Sig. (2-tailed)
1
0.243*
0.090
0.227
0.112
0.374**
0.007
IND
Pearson
Sig. (2-tailed)
0.243*
0.090
1
-0.100
0.488
-0.090
0.536
GEPS
Pearson
Sig. (2-tailed)
0.227
0.112
-0.100
0.488
1
0.210
0.143
GYEP
Pearson
Sig. (2-tailed)
0.374**
0.007
-0.090
0.536
0.210
0.143
1
*Correlation is significant at the 0.1 level.
**Correlation is significant at the 0.01 level
4.3 Logistic Regression Results
Hypotheses H1 to H3 are tested by using logistic regressions. The dependant
variables are SR, which is whether the companies provided standalone
sustainability reports three years continuously before 2013. The independent
variables are industry that the companies belong to (IND), growth in earnings
per share (GEPS) and growth in year-end share price (GYEP). The regression
model estimation is presented in Table 4.
Table 4: Regression model (N = 50)
Estimate
S.E.
Wald
df
Sig.
IND
-1.682
0.831
4.094
1
0.043
Comment [OM12]: Including
regression results is really impressive.
The actual attempt to do real research
in this project is so good, that this
study could form the basis (with
further development) for a
peer-reviewed journal article…and
that’s excellent!
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GEPS
0.009
0.011
0.716
1
0.397
GYEP
0.059
0.023
6.579
1
0.010
Constant
1.165
0.700
2.771
1
0.096
The analyses show that industry (IND) is significantly related to SR, however,
the coefficient estimate sign is negative implying that non-environmentally
sensitive industries provide sustainability report. GYEP is positively and
significantly related to SR, while there is no significant correlation between
GEPS and SR.
5 Discussion
This section will compare the findings and literature review. The purpose of this
study was to examine if the market performance, as measured by growth in
earnings per share and growth in year-end share price, is associated with
sustainability disclosure provided in a sample of 50 companies being the
constituent stocks in Hang Seng Index between 2013 and 2014.
5.1 H1: Sustainability reports are significantly related to the
industry the company belongs to as implied in
social-political theories
The findings show that sustainability disclosures increased within three years
before 2013. More than half of companies published standalone sustainability
reports. Both correlation and regression analyses indicate sustainability
disclosures has significant relationship with industry. However, regression
model contradicts with the claims made in the previous literature review.
Social-political theories, which comprise political economy theory, stakeholder
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theory and legitimacy theory, suggest that the willingness of disclosing
environmental information is based on the level of social and political pressure
faced by the companies. This implied that the environmentally sensitive
companies have a higher chance to provide sustainability information, which is
confirmed by the findings. In contrast, regression model indicates that
non-environmentally sensitive companies have a higher chance to provide
sustainability information.
5.2 H2: Sustainability reports are significantly related to the
shareholder returns (growth in earnings per share) as
implied in voluntary disclosure theories H3:
Sustainability reports are significantly related to the
market perception (growth in year-end share price) as
implied in voluntary disclosure theories.
The findings, confirm that sustainability reports are significantly related to
market perception, as measured by growth in year-end share price. This
reinforces that companies with better performance intend to provide more
information to maintain their superiority against non-disclosers, which is also
known as voluntary disclosure theory mentioned in the literature review. In
contrast, the findings do not provide sufficient evident to confirm that there are
associations between sustainability reports and shareholder returns, which is
demonstrated by earnings per share. These findings consistent with the results
from previous researches by Carnevale and Mazzuca (2014). They also
concluded that positive relationships exist between sustainability information
and stock prices, but not earnings per share. This may be because earnings
per share is a short term result, which depends on the performance of that
Comment [OM13]: This is excellent.
The student is linking the findings with
previous literature. The literature
review should be looped back into the
discussion section, ideally.
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particular year (Carnevale and Mazzuca, 2014).
6 Conclusion
This section will address aims and research questions, point out the limitations
and recommendations.
6.1 Addressing aims and research questions
The aim of this research is to investigate the impact of sustainability
disclosures on market performance. Three research questions are provided to
specifically address to the aim.
First question is about the percentage of companies among 50 constituent
stocks in Hong Kong’s Hang Seng Index (HIS). The results show that as of
2013, there are 35 companies provided standalone sustainability reports,
which account for 70%. Out of these 35 companies, 26 of them had provided
standalone sustainability reports for more than three years before 2013, which
is 52%.
The second question is about the relationship between sustainability reports
and industry of the companies. The research results demonstrate a significant
and negative relationship between these two variables, which may infer that
social and political attention not only focus on environmentally sensitive
industries, but also non-environmentally sensitive industries. This result is
similar to those in previous studies by Elijido-Ten (2011).
The third question is about the correlations between sustainability reporting
Comment [SM14]: A clear
conclusion that addresses all
requirements.
Page 20 of 28
and the market performance. The results partly support the positive
relationship between them. To be more specific, the data demonstrates that
sustainability reporting is positively related to market perception, which is
shown by growth in year-end share price, while no significant correlation is
found between sustainability reporting and shareholder return, which is
measured by growth in earnings per share. This result is similar to those in
previous studies by Carnevale and Mazzuca (2014).
6.2 Limitations
The first limitation of this research is the sample size of 50 companies.
Although, according to Mundfrom, Shaw and Ke (2005), this is above the
minimum sample size with four variables, it is better to be recognised that this
studies may be focus on these 50 companies and may not be generalised to
all other companies.
The second limitation is that these 50 companies are all listed and mainly
based in Hong Kong. As a major international finance centre in Asia, many
multinational companies are listed in Hong Kong, and some of companies in
the sample operated or invested internationally, such as HSBC Holdings, AIA
Corporation. It is good to noted that this studies may be focus on Hong Kong
market and may not be generalised to other regions.
6.3 Recommendations
This sub-section will identify the recommendations for managers and
professionals as well as researchers.
Comment [OM15]: Excellent
recommendations. Note how the
student has again mixed in academic
references. Great work here.
Page 21 of 28
As this project concludes that there is a significant relationship between
sustainability reporting and market perception, this may imply that potential
investors may seek more sustainability information. It is suggested that those
companies, which have not provide sustainability information to public, should
consider publishing this kind of information.
The findings confirm sustainability information is positively related to market
perception. However, unlike financial reports, there is no rule and regulation
about the quality of the sustainability report. Jaggi and Zhao (1996) indicated
that there was a gap between actual environmental disclosures and the
perceived importance of environmental disclosures. It is recommended that
those companies, which publish sustainability report annually, should
understand the expectation of stakeholders in order to improve their quality of
sustainability report.
As demonstrated above, sustainability reporting is important to companies.
Accounting professionals and accounting firms should be aware of the trends
and importance of sustainability reports. Wong, Wong, Li and Chen (2016)
indicated that companies chose from three types of providers, such as
accounting firms, non-accounting specialist consulting firms and
non-accounting general consulting firms and concluded that larger firms
tended to hire accounting firms to add credibility to their sustainability reports.
As for researchers, as more companies start to prepare sustainability reports
annually, stakeholders’ expectation about sustainability reporting is also an
interesting topic for further studies.
Comment [SM16]: Some
implications for practice
Comment [SM17]:
Following paragraphs explain
recommendations for further research
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This study focuses on Hong Kong. Some other studies focus on Australia
(Elijido-Ten, 2007), the United Kingdom (Karim, Suh, Carter, & Zhang, 2015)
and the United States (Ilacqua, 2008), research in other regions, especially
those in Asia, is recommended to investigate if other regions have similar
results.
This study focuses on listed companies and, according to Studer, Tsang,
Welford and Hills (2008), small and medium-sized enterprises are not aware of
the importance of environmental impacts of the business. It is suggested that
further studies about the impact of sustainability information provided by small
and medium enterprises on market performance may be beneficial to the
managers of small and medium companies.
Page 23 of 28
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Formatting is well done though.
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Page 26 of 28
Appendix: Results from SPSS
Descriptive Statistics (Indicator Variables)
Sustainability Report
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
0
24
48.0
48.0
48.0
1
26
52.0
52.0
100.0
Total
50
100.0
100.0
Industry
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
0
36
72.0
72.0
72.0
1
14
28.0
28.0
100.0
Total
50
100.0
100.0
Descriptive Statistics (Continuous Variables)
Descriptive Statistics
N
Range
Minimum
Maximum
Mean
Std. Deviation
Growth in earnings
per share
50
555.32347460
-108.86075950
446.46271510
7.2745128135
71.75260213010
Growth in year-end
share price
50
81.31712150
-46.33967789
34.97744361
1.8964048705
18.08001736755
Valid N (listwise)
50
Page 27 of 28
Bivariate Correlation (N = 50)
Correlations
Sustainability
Report
Industry
Growth in
earnings per
share
Growth in
year-end share
price
Spearman’s rho
Sustainability Report
Correlation Coefficient
1.000
.243
.227
.374**
Sig. (2-tailed)
.
.090
.112
.007
N
50
50
50
50
Industry
Correlation Coefficient
.243
1.000
-.100
-.090
Sig. (2-tailed)
.090
.
.488
.536
N
50
50
50
50
Growth in earnings per share
Correlation Coefficient
.227
-.100
1.000
.210
Sig. (2-tailed)
.112
.488
.
.143
N
50
50
50
50
Growth in year-end share price
Correlation Coefficient
.374**
-.090
.210
1.000
Sig. (2-tailed)
.007
.536
.143
.
N
50
50
50
50
**. Correlation is significant at the 0.01 level (2-tailed).
Page 28 of 28
Logistic regression model (N = 50)
Variables in the Equation
B
S.E.
Wald
df
Sig.
Exp(B)
Step 1a
Industry(1)
-1.682
.831
4.094
1
.043
.186
Growth in earnings per share
.009
.011
.716
1
.397
1.010
Growth in year-end share
price
.059
.023
6.579
1
.010
1.060
Constant
1.165
.700
2.771
1
.096
3.206
a. Variable(s) entered on step 1: Industry, Growth in earnings per share, Growth in year-end share price.
