Impact of sustainability reporting on financial performance and risks: Evidence from the emerging market

This study investigates the impact of sustainability reporting (SR) on the financial performance of industrial companies listed on the Amman Stock Exchange (ASE) from 2016 to 2022. Focusing on return on assets (ROA), return on equity (ROE), and earnings per share (EPS), the research addresses the persistent challenges in economic sustainability (ES), environmental sustainability (ENS), and social sustainability (SOCS) among Jordanian industrial companies, which are attributed to limited disclosure indicators in annual reports. Methodologically, the study employs tests for normal distribution, multicollinearity, Pearson correlation matrix, variance inflation factor (VIF), stationary testing, and regression analysis with lagged independent variables. The findings reveal that economic, environmental, and SOCS positively affect ROA and ROE, whereas these factors have not significantly impacted market performance indicators such as EPS and Tobin’s Q. Market fluctuations appear to be driven more by speculation than by sustainability disclosures. These results highlight the complex interplay between sustainability practices and financial outcomes, offering valuable insights for decision-makers, investors, and stakeholders.