The Impact of ESG Reporting Quality on Firm Financial Performance: A Comparative Analysis of the UK and New Zealand Markets

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides comparative evidence on ESG reporting quality and financial performance across two institutional contexts, useful for understanding moderating factors.

🏢実務担当者:Confirms that investing in higher-quality ESG reporting can improve financial performance and market valuation, supporting business case for robust disclosure.

🏛政策担当者:Highlights that regulatory frameworks and market maturity influence the effectiveness of ESG disclosure, suggesting policy design matters.

This study investigates the impact of Environmental, Social, and Governance (ESG) reporting quality on firm financial performance through a comparative analysis of companies in the United Kingdom and New Zealand. As sustainability disclosure becomes increasingly central to corporate strategy and investment decision-making, understanding its financial implications is critical for firms, investors, and policymakers. Using panel data regression analysis, the study examines the relationship between ESG reporting quality and both accounting-based measures (return on assets and return on equity) and market-based measures (Tobin's Q). The findings reveal a positive and statistically significant relationship between ESG reporting quality and firm financial performance, indicating that firms with higher-quality disclosures tend to achieve superior profitability and market valuation. The results further show that the relationship is stronger in the United Kingdom than in New Zealand, suggesting that institutional factors such as regulatory frameworks, market maturity, and investor awareness play a crucial role in shaping ESG effectiveness. Additionally, firm-specific variables influence outcomes, with firm size positively associated with financial performance, while leverage demonstrates a negative relationship. The study contributes to existing literature by providing comparative evidence from two developed but institutionally distinct markets, highlighting the importance of contextual factors in ESG research. The findings support stakeholder, legitimacy, and resource-based theories, demonstrating that ESG reporting quality enhances transparency, reduces information asymmetry, and strengthens stakeholder trust. Overall, the research underscores the strategic importance of high-quality ESG reporting as a driver of long-term value creation and sustainable financial performance.

• openalex https://doi.org/10.30574/ijsra.2026.19.3.1281first seen 2026-06-18 04:51:01