“You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long Term
This study investigates the relationships among firms’ sustainability disclosure, sustainability performance, and financial performance. Based on legitimacy theory and signaling theory, it argues that sustainability disclosure participates in two distinct mechanisms: a conformity mechanism through w...
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| Format: | Article |
| Language: | English |
| Published: |
Association International de Management Stratégique (AIMS)
2020-03-01
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| Series: | M@n@gement |
| Subjects: | |
| Online Access: | https://management-aims.com/index.php/mgmt/article/view/4427/10193 |
| _version_ | 1818179293634625536 |
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| author | Samuel Touboul Asli Kozan |
| author_facet | Samuel Touboul Asli Kozan |
| author_sort | Samuel Touboul |
| collection | DOAJ |
| description | This study investigates the relationships among firms’ sustainability disclosure, sustainability performance, and financial performance. Based on legitimacy theory and signaling theory, it argues that sustainability disclosure participates in two distinct mechanisms: a conformity mechanism through which disclosure shows conformity to the norms and a revelation mechanism through which disclosure reveals or hides a firm’s achieved degree of sustainability. In an attempt to contrast and reconcile the two mechanisms, the study assesses their impact on financial performance in the short and long term. Hypotheses are tested using longitudinal data (2002–2010), which cover 10,814 observations of firms from major indexes of stock exchanges worldwide. The results show that the conformity mechanism is effective in both the short and long terms, whereas the revelation mechanism is only effective in the short term. As a consequence, firms with poor sustainability performance may hide their detrimental impact and achieve higher financial performance in the short term by limiting their disclosure but not in the long term in which their lack of conformity is punished. In the long term, only conformity to the norms of disclosure leads to higher financial performance, even in the case of poor sustainability results. |
| first_indexed | 2024-12-11T21:01:34Z |
| format | Article |
| id | doaj.art-3813b4b656af4620bbc19936cf0a28db |
| institution | Directory Open Access Journal |
| issn | 1286-4692 |
| language | English |
| last_indexed | 2024-12-11T21:01:34Z |
| publishDate | 2020-03-01 |
| publisher | Association International de Management Stratégique (AIMS) |
| record_format | Article |
| series | M@n@gement |
| spelling | doaj.art-3813b4b656af4620bbc19936cf0a28db2022-12-22T00:50:58ZengAssociation International de Management Stratégique (AIMS)M@n@gement1286-46922020-03-0123111910.37725/mgmt.v23.44274427“You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long TermSamuel Touboul0Asli Kozan1Society and Organizations Research Center, HEC Paris, FranceDepartment of Strategy and Management, IPAG Business School, Paris, FranceThis study investigates the relationships among firms’ sustainability disclosure, sustainability performance, and financial performance. Based on legitimacy theory and signaling theory, it argues that sustainability disclosure participates in two distinct mechanisms: a conformity mechanism through which disclosure shows conformity to the norms and a revelation mechanism through which disclosure reveals or hides a firm’s achieved degree of sustainability. In an attempt to contrast and reconcile the two mechanisms, the study assesses their impact on financial performance in the short and long term. Hypotheses are tested using longitudinal data (2002–2010), which cover 10,814 observations of firms from major indexes of stock exchanges worldwide. The results show that the conformity mechanism is effective in both the short and long terms, whereas the revelation mechanism is only effective in the short term. As a consequence, firms with poor sustainability performance may hide their detrimental impact and achieve higher financial performance in the short term by limiting their disclosure but not in the long term in which their lack of conformity is punished. In the long term, only conformity to the norms of disclosure leads to higher financial performance, even in the case of poor sustainability results.https://management-aims.com/index.php/mgmt/article/view/4427/10193sustainability disclosuresustainability performancefinancial performanceconformity mechanismrevelation mechanism |
| spellingShingle | Samuel Touboul Asli Kozan “You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long Term M@n@gement sustainability disclosure sustainability performance financial performance conformity mechanism revelation mechanism |
| title | “You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long Term |
| title_full | “You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long Term |
| title_fullStr | “You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long Term |
| title_full_unstemmed | “You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long Term |
| title_short | “You Cannot Hide Forever Luke”: Understanding the Strategic Use of Sustainability Disclosure in the Short and Long Term |
| title_sort | you cannot hide forever luke understanding the strategic use of sustainability disclosure in the short and long term |
| topic | sustainability disclosure sustainability performance financial performance conformity mechanism revelation mechanism |
| url | https://management-aims.com/index.php/mgmt/article/view/4427/10193 |
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