The association between sustainability disclosures and the financial performance of Jordanian firms

Figures & data

Table 1. Sample selection criteria

Description	Number of observations
All firms listed on the ASE from 2009 to 2018	2,246
Less: missing environmental data	(168)
Less: missing social data	(126)
Less: missing governance data	(112)
Less: missing financial data	(135)
Final sample	1,705

Table 2. Summary of variables and their measurements

Description	Variable name	Measurement	Exp. sign
Dependent variable: ROA	Return on assets	The ratio of net income to total assets
Independent variables: ENV.DIS SOC.DIS GOV.DIS	Environmental disclosure Social disclosure Governance disclosure	An aggregated score of seven variables An aggregated score of thirteen variables An aggregated score of eight variables	+ + +
Control variables: SIZE LEV MLS	Firm size Leverage Market listing status	The total assets at the end of year The ratio of total debt to total equity A dummy variable that takes the value of one if the firm is listed in the first market, and zero if the firm is listed in the second or third market	+ - +

Table 3. Descriptive statistics

Variables	Observations	Mean	Median	Min	Max
ROA	1,705	0.021	0.012	−1.015	1.278
ENV.DIS	1,705	0.364	0.285	0.000	0.857
SOC.DIS	1,705	0.331	0.303	0.000	0.833
GOV.DIS	1,705	0.342	0.250	0.125	0.875
SIZE (in million $US)	1,705	223.6	201.9	0.137	8300
LEV	1,705	0.742	0.270	0.147	2.189
MLS	1,705	0.373	0.247	0.000	1.000

All variables are defined in Table 2.

Table 4. Correlation matrix

Variables	ROA	ENV.DIS	SOC.DIS	GOV.DIS	SIZE	LEV	MLS
ROA	1.000
ENV.DIS	0.066*	1.000
SOC.DIS	0.173*	0.285*	1.000
GOV.DIS	0.051*	−0.003	0.307*	1.000
SIZE	0.227*	0.234*	0.460*	0.217*	1.000
LEV	0.020*	0.208*	0.212*	0.088*	0.384*	1.000
MLS	0.317	0.109*	0.296	0.104*	0.393*	0.169*	1.000

The symbol (*) denotes significance at 1 percent in two-tailed test.

All variables are defined in Table 2.

Table 5. Regression results of the association between sustainability disclosures and ROA

Variables	Coefficient	T-value	Probability
ENV.DIS	0.222	1.05	0.291
SOC.DIS	1.637	7.06	0.000
GOV.DIS	1.777	6.07	0.000
SIZE	1.760	2.35	0.019
LEV	−0.009	−2.43	0.015
MLS	0.090	2.87	0.004
Constant	−1.428	−10.49	0.000
Adjusted R^2 No. of observations	18.6 1,705

Notes: This table presents the results of fixed effect regression of the association between sustainability disclosures and ROA. The sample comprises 1,705 firm-year observations of firms listed on the ASE from 2009 to 2018. The dependent variable is return on assets (ROA). Independent and control variables are defined in Table 2.

Table 6. Regression results of the association between sustainability disclosures and Tobin’s Q

Variables	Coefficient	T-value	Probability
ENV.DIS	0.339	1.43	0.153
SOC.DIS	1.791	7.63	0.000
GOV.DIS	2.463	7.46	0.000
SIZE	2.810	3.34	0.001
LEV	−0.010	−3.22	0.001
MLS	0.135	3.81	0.000
Constant	−1.852	−12.07	0.000
Adjusted R^2 No. of observations	21.9 1,705

Notes: This table presents the results of fixed effect regression of the association between sustainability disclosures and Tobin’s Q. The sample comprises 1,705 firm-year observations of firms listed on the ASE from 2009 to 2018. The dependent variable is Tobin’s Q, which is measured by the ratio of market value of a firm’s equity divided by its book value. Independent and control variables are defined in Table 2.

Table 7. Regression results of the association between the aggregated score format of sustainability disclosures and financial performance

Variables	Model One		Model Two
	Coefficient T-value		Coefficient T-value
DIS.SCORE	3.422	10.41***	3.888	10.46***
SIZE	1.800	2.42**	3.020	3.59***
LEV	−0.001	−2.74***	−0.002	−3.58***
MLS	0.088	2.82***	0.134	3.76***
Constant	−1.368	−11.05***	−1.627	−11.63***
Adjusted R^2 No. of observations	21.9 1,705		26.8 1,705

Notes: This table presents the results of fixed effect regression of the association between the aggregated score format of sustainability disclosures (DIS.SCORE) and financial performance. In model one, financial performance is measured by ROA. In model two, financial performance is measured by Tobin’s Q. The sample comprises 1,705 firm-year observations of firms listed on the ASE from 2009 to 2018. Independent and control variables are defined in Table 2.

The symbols (*), (**) and (***) denote significance at 10, 5 and 1 percent, respectively, in two-tailed test.