Practice non-financial reporting in accordance with the recommendations of the global reporting initiative - Дипломная работа

Contents Introduction 1. Theoretical background 1.1 Sustainability reporting 1.2 Social responsibility - Financial Performance link 1.2.1. Older studies 1.2.2 Newer studies 2. Research approach 3. Methodology and data 4. Results 5. Further analysis Conclusion References Introduction According to the theories of many well-known sociologists, such as M. Castells, L. Sklar, L. Weiss, today we live in the era of globalization. Globalization as multilateral integration process that is taking place in almost all spheres of life: social, political, cultural, economic. Creation of transnational corporations, rapid development of information and communication technologies that facilitate instantaneous continuous exchange of information, formation of political and economic unions, gradual transition to the so-called “global” culture - all these phenomena are both signs and consequences of globalization. Due to the advent of international and multinational companies that conduct their business in various countries around the world, as a rule have many investors and support cooperation with a number of foreign companies, private or public, the need for some harmonization and standardization of forms and types of interaction between companies and other economic agents gradually began to emerge. In particular, this trend has concerned the practice of disclosure of corporate performance. While regular publication of financial statements in accordance with officially accepted standards is mandatory for certain forms of organizations and has long been attempted by companies around the world, the practice of non-financial indicators disclosure has become a completely new form of informing economic markets participants on firm performance (Willis, 2003). At the beginning of 2000-ies, at the dawn of this practice, when there were no strict rules of conducting non-financial reporting, the number of companies disclosing non-financial indicators was fairly limited; however, in the last 15 years, the awareness of benefits and favorable consequences of conducting non-financial reporting has increased significantly. This led to the increase in the number of publishing companies and the development of more stringent standards. In this work we will concentrate on the practice of non-financial reports preparation according to recommendations of Global Reporting Initiative. By analyzing the first published non-financial reports of 202 companies operating on markets of Group of Seven, we will assess the potential relationship between the degree of companies’ transparency and their financial performance. Moreover, the comparison of financial results of these companies during the following years after the first non-financial report publication (all of these companies continued to publish reports annually) with financial performance of their non-publishing peers will allows us to examine the effect of regular information disclosure on business financial health. transparency financial business 1. Theoretical background 1.1 Sustainability reporting Non-financial reporting is also referred to as sustainability reporting. However, before giving the formal definition of “sustainability reporting”, it is necessary to analyze the meaning of the term “sustainable development” in general. By talking about “sustainable development”, scientific literature refers to society development that meets the needs of present generations without compromising the opportunities left as a legacy for future generations to meet their own needs. In the context of firms and corporations functioning, sustainable development means economic growth without damaging natural, biological and productive resources. However, sustainable development should not be considered exclusively within the sphere of ecology. On the contrary, all issues related to sustainable development of companies are traditionally considered in three aspects - economic, social and environmental - shaping a so-called “three pillars” of sustainable development (Aras, Crowther, 2009). The economic aspect of sustainable development indicates the need for equitable and efficient distribution of production resources in order to maintain a balance between short-term and long-term economic growth. The social aspect involves company’s awareness of moral responsibility for the consequences of its activities, in varying degrees associated with problems of social well-being of both private and global scale. Finally, the environmental dimension of sustainable development implies the reduction of negative impact of company’s activities on the environment in general and on non-renewable natural resources in particular, and the adoption of measures for the transition to environmentally sound production (Aras, Crowther, 2009). Thus, the term “sustainability reporting” could be characterized as the practice of measurement and disclosure of information for needs of internal and external stakeholders, the interest of whic