Sustainable disclosure policies and sustainable performance of european listed companies

Abstract

Sustainable disclosure has become common for companies to publicly signal their responsible behavior. Our research idea is twofold. First-irrespective of its content-better quality sustainable disclosure should identify more sustainability compliant companies. Second, we propose that those companies should have a more stable-and thus more sustainable-performance. Focusing on the top-capitalized companies of the EU-28 stock exchanges, we assess how GRI sustainable-reporting quality associates with stock-price volatility and distance-to-default. Our results, which resist various robustness checks, confirm that better quality sustainable disclosure couples with more sustainable performance. Thus, pro-disclosure policies could enhance long-term value creation.