The Effect of Integrated Reporting on Sustainable Performance: Evidence from Financial Indicators

Abstract

This study aims to examine the effect of integrated reporting and financial indicators on the sustainability performance of banks within the SADC. Data were collected from annual reports and official stock exchange platforms of banks listed on SADC stock exchanges, from 2019 to 2023. Multiple linear regression analysis was utilized to assess the simultaneous impact of independent variables, including IRQ and selected financial indicators, on the dependent variable, sustainability performance. To ensure the robustness of the regression model, statistical tests such as the variance inflation factor were conducted to detect multicollinearity among the independent variables, and unit root tests were performed to confirm the stationarity of the data series. The regression analysis revealed that higher IRQ scores are significantly associated with enhanced sustainability performance, suggesting that comprehensive and transparent reporting practices positively influence sustainability outcomes. Financial indicators: ROA and market capitalization also showed positive correlations with sustainability performance, indicating that profitable banks with substantial market presence are better positioned to implement effective sustainability initiatives. Conversely, a negative association was found between WACC and sustainability performance, implying that higher financing costs may hinder banks' ability to invest in sustainable practices. An unexpected negative relationship between COGOV and sustainability performance suggests potential misalignments in governance structures that warrant further investigation. This study provides important guidance for banks in the SADC that are looking to boost their sustainability efforts. By adopting high-quality IR and refining their financial strategies, these banks can enhance transparency, strengthen accountability, and allocate resources more effectively to ESG initiatives.