Abstract:
Sustainability reporting cannot be overlooked due to the firm's current and
future ramifications. However, sustainability reporting standards are generally
optional, and corporations are hesitant to incorporate new systemic procedures
without a quantifiable economic gain. Manufacturing enterprises in Africa
demand greater resources to operate, thus their actions to limit and mitigate
harm must be reviewed. Convergence of interest asserts that if directors' and the
firm's interests coincide, the firm will perform better financially. By using the
GMM estimating technique, this research examined the moderating effect of
directors' ownership in the relationship between sustainability reporting and the
financial performance of 154 manufacturing companies. A total sample of 158
was employed however some firms appeared on multiple stock exchanges and
these duplicates were omitted to arrive at a sample size of 154 firms. The study
also examined the level of sustainability reporting by African manufacturing
firms. First, the study found that African manufacturing firms scored very low
marks in the level of sustainability reporting. Also, directors’ ownership
positively moderates the relationship between economic disclosures and both
ROA and ROE only. It is recommended that manufacturing firms in Africa
should increase their sustainability reporting disclosures, especially those that
pertain to the environmental impact of their activities as well as maintain or
increase their directors’ ownership levels to ensure that they positively affect
their economic disclosures and financial performance.
