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Sustainability 2018, 10(3), 678; https://doi.org/10.3390/su10030678

Sustainability Reporting and Value Relevance of Financial Statements

1
Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36A, Surakarta 57126, Indonesia
2
Faculty of Applied Sciences, The University of Dabrowa Górnicza, ul. Cieplaka 1C, 41-300 Dąbrowa Górnicza, Poland
3
Faculty of Economic Sciences and IT, North-West University, Vaal Triangle Campus, P.O. Box 1174, Vanderbijlpark 1900, South Africa
*
Author to whom correspondence should be addressed.
Received: 7 January 2018 / Revised: 18 February 2018 / Accepted: 27 February 2018 / Published: 2 March 2018
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Abstract

This study examines whether information about the winners of the Sustainability Reporting Award (SRA) contributes to the usefulness of the information in financial statements. This study used a sample consisting of 110 winners of SRA (SRA firms) and 110 companies that did not receive SRA (non-SRA firms) from 2008 to 2016. The study found that earnings per share (EPS), earnings per share change (EPSC), and book value per share (BVPS) are value-relevant information. Results of comparison between SRA firms and non-SRA firms show that the positive association between EPS and stock price (P) and the positive association of EPS with stock returns (R) for SRA firms are higher than that for the non-SRA firms. In addition, findings of this study indicate that EPSC is positively associated with R when EPSC and R are measured by Indonesian rupiah (IDR) instead of by percentage, and the positive association between EPSC and R for the SRA firms is higher than that for the non-SRA firms. Thus, the results are sensitive to measures of the variables. However, this study found that value relevance of BVPS for SRA firms is lower than for non-SRA firms. Implication of this study is that information about the winners of SRA contributes to the usefulness of financial statements, especially the information of EPS and EPSC. View Full-Text
Keywords: Sustainability Reporting Award (SRA); financial statements; value relevance; earnings per share (EPS); earnings per share change (CEPS); book value per share (BVPS) Sustainability Reporting Award (SRA); financial statements; value relevance; earnings per share (EPS); earnings per share change (CEPS); book value per share (BVPS)
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).
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Sutopo, B.; Kot, S.; Adiati, A.K.; Ardila, L.N. Sustainability Reporting and Value Relevance of Financial Statements. Sustainability 2018, 10, 678.

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