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Open AccessArticle

Mandatory Nonfinancial Disclosure and Its Consequences on the Sustainability Reporting Quality of Italian and German Companies

1
Department of Business Administration, University of Verona, via Cantarane 24, 37129 Verona, Italy
2
Institute of Economics, Friedrich-Alexander University Erlangen-Nürnberg (FAU), Kochstr, 4 (17), 91054 Erlangen, Germany
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(17), 4612; https://doi.org/10.3390/su11174612
Received: 5 August 2019 / Revised: 19 August 2019 / Accepted: 20 August 2019 / Published: 24 August 2019
Companies disclosing nonfinancial information through sustainability reporting practices provide markets with data on their social, environmental, and governance performance. The quality of sustainability reporting is much discussed in the literature because this quality affects factors such as the credibility of accountability and building stakeholders’ trust in the company. Nonetheless, the concept of quality is multidimensional, and empirical evidence relating to the quality of sustainability reporting presents different findings. Regulations on mandatory nonfinancial disclosure (NFD) open new perspectives for research on sustainability reporting quality (SRQ). This study explored the effect of introducing mandatory NFD on SRQ by focusing on the effects of new legislation (Directive 2014/95/EU) introduced in Italy and Germany. The analysis was conducted through qualitative content analysis of the sustainability reporting practices of Italian and German companies in the top lists of stock exchanges. Sustainability reporting practices of one year before (2016) and one year after (2017) the implementation of Directive 2014/95/EU were compared. The results of 132 observations demonstrated that the quality of sustainability reporting increased after implementation of the law on mandatory NFD. Further, the effect of the law seemed to reduce the differences in SRQ of the two countries before the introduction of mandatory NFD. The results suggested that obligatoriness of NFD affects SRQ together with other relevant determinants focused on by previous research (e.g., company size and industry type). View Full-Text
Keywords: sustainability reporting; sustainability reporting quality; CSR reporting; nonfinancial disclosure; mandatory reporting sustainability reporting; sustainability reporting quality; CSR reporting; nonfinancial disclosure; mandatory reporting
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MDPI and ACS Style

Mion, G.; Loza Adaui, C.R. Mandatory Nonfinancial Disclosure and Its Consequences on the Sustainability Reporting Quality of Italian and German Companies. Sustainability 2019, 11, 4612. https://doi.org/10.3390/su11174612

AMA Style

Mion G, Loza Adaui CR. Mandatory Nonfinancial Disclosure and Its Consequences on the Sustainability Reporting Quality of Italian and German Companies. Sustainability. 2019; 11(17):4612. https://doi.org/10.3390/su11174612

Chicago/Turabian Style

Mion, Giorgio; Loza Adaui, Cristian R. 2019. "Mandatory Nonfinancial Disclosure and Its Consequences on the Sustainability Reporting Quality of Italian and German Companies" Sustainability 11, no. 17: 4612. https://doi.org/10.3390/su11174612

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Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

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