The Role of Sustainability Statements in Investor Relations: An Analysis of the Annual Reports of Airline Companies

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The manuscript is well-written and presents an interesting topic. I have several comments:

·         The authors should specify which exchanges the sample firms are traded and which regulation apply for each firm since the disclosure may be affected by regulation. For example, I assume that Turkish Airlines is subject to Turkish rules and other airlines are not.

·          The pandemic occurred during the sample period (2018-2022). Since it had a crucial effect on airlines, I think the authors should discuss how it affected annual reports and ESG policies of sample firms. For example, I Covid-19 probably had critical influence on employment.

·       When discussing disclosure of non-financial, non-mandatory information, the authors note that this information can be biased and self-serving (lines 276-279). The authors should expand the discussion in prior literature suggesting that managers strategically disclose voluntary information and that they may use it to influence stock prices, e.g., Mercer (2004), Hummel and Schlick (2016), Abudy and Shust (2020).

·         Do the authors have quantitative data that demonstrates how these airlines have acted to achieve sustainability goals? For example, reduction of emission, etc.? it is interesting whether sustainability statements are associated with actual actions (or serve for 'greenwashing' purposes).

 

·        Overall, the magnitude of the sustainability disclosure is increasing over the years. A noteworthy exception is AF, that reduced the number of pages on sustainability from 20 in 2019 to 5 in 2020. Can the authors comment on this?

 

 References:

Abudy, M., & Shust, E. (2020). What happens to trading volume when the regulator bans voluntary disclosure?. European Accounting Review, 29(3), 555-580.‏

Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and sustainability disclosure–Reconciling voluntary disclosure theory and legitimacy theory. Journal of accounting and public policy, 35(5), 455-476.‏

Mercer, M. (2004). How do investors assess the credibility of management disclosures?. Accounting Horizons, 18(3), 185-196.‏

 

Author Response

Dear Reviewer,

You can find explanations regarding your revision requests in the attachment. Thank you for your valuable contributions.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

Sections 1 and 2 are very long and include many things that can be removed from the text: for example, the history and the definitions of some notions and concepts or institutions do not have place in the article, as long as they can be found in numerous other documents. I think that the first 7 – pages that comprise these sections 1 and 2 – can be summarized very easily to a maximum of 2 pages, by eliminating trivial and well-known issues, as well as eliminating the repetition of ideas. Such an adjustment would be necessary, also because, in terms of methodology and results, only very little is mobilised of some of the ideas presented in Sections 1 and 2. Here, too, I would say that slogans specific to sustainable development should be avoided – are only slogans and, even if they take place in specific reports, they must be presented as such.

 

Referring to old documents and events is, I think, not necessary, especially since it is not at all clear whether the predictions set out on those occasions have been confirmed or not.

Also, many of the ideas presented as requirements imposed by various organizations or stakeholders can be valid only in certain geographic and economic contexts. It is unlikely that the notions addressed in the article will be understood, applied and operationalized in the same way in the USA, in Europe and in China.

In the same sections 1 and 2, the authors insist – predictable and justified by the research theme – on reporting CS issues; would it not be useful to make at least some assessments about the actual actions in this regard and not just about the corresponding reporting? Or, if nothing can be identified about the actions, make a mention of it. Otherwise, the text remain in a formal registry without addressing the substance of the problem.

There are, in the text, slightly rushed formulations that may require more attention. For example, (lines 209-210), the authors state, rather abruptly, that ” Investors are one of the most important stakeholders of organizations in SC.” What is this: a reality or a hypothesis? If it is a reality, it should be confirmed by relevant citations; if it is a hypothesis, it should be rephrased.

I think that references to the Enron and others scandals of the early 2000s are to be avoided – are found in too many publications and perhaps a more general rewording, with reference to various crises, it would be more useful.

I also think that the developments on CS – brought to 2 pages instead of 7 – could also include some doubts about the compliance with the reality of the data provided by companies: is there some independent person who checks non-financial reports so that users can rely on them; the reporting policies of firms want to highlight only rather positive aspects, ignoring some less favourable parts?

It's not very clear why it went from a number of 10 companies – maybe a more explicit mention in this regard should be made in section 3. In the studies invoked at LR is clearly analyzed more firms. The arguments regarding the elimination of the three American companies do not seem very convincing, it is true that they draw up 10-K, but do not publish reports from which to reveal the environmental aspects, social and governance?

In Table 2, it is risky to gather the number of pages related to each company, for reasons related to differences between companies in terms of document format, used fonts, number and dimensions of inserted images etc. I think it would be useful for the authors to make some clarifications in this regard.

Lines 613-614: the authors claim that ”there hasn't been a noticeable decline in sustainability disclosures and activities”; for the disclosure” part, it is rather clear; what is the justification of the references to activities?

In Table 5 (and in others), if the sign % is put in the table header, it is no longer necessary on each digit - it occupies unnecessary place.

In all descriptions of the practices of the firms analysed, would it not be good to refer to the mandatory laws/standards in the countries of origin of the firms?

Several times the word “discover” or its derivatives appears. For example, line 656, ”it was discovered” appears: it is not a discovery, but a simple descriptive observation.

Tables 7 through 12 take up a lot of room in the text. Would it not be better for the authors to group them into a single table, in which they put all the identified aspects and tick which of them corresponds to each analyzed company? In this way, an effort of systematization would be made, trying to identify homogeneous aspects, common to two or more companies; at the same time, differences between firms may appear distinctly.

At the conclusions, some trivial issues are again resumed: it is enough to put a few phrases about the research question, sample and methodology, without resuming the things present in literature; to all this is added, obviously, the description of the main results.

Author Response

Dear reviewer,

You can find explanations regarding your revision requests in the attachment. Thank you for your valuable contributions.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

The paper goes into an attracting and relevant issue within the field of energy economics literature, While the study given is detailed and informative, I would like to make some majors suggestions to improve the content and readability:

 

How much does investor decision-making about airline firms get influenced by sustainability statements in annual reports, and how does this impact differ from standard financial metrics?

Could better financial performance and long-term shareholder value result from airline firms incorporating sustainability measures into their investor relations strategies? How can these possible advantages be properly measured and conveyed?

What are the main obstacles that airline firms must overcome in order to effectively assess and disclose their sustainability performance, especially when it comes to metrics like fuel economy, carbon emissions, and community involvement?

What aspects of the sustainability disclosures made by airline firms in their annual reports do investors find credible and transparent, and what factors affect their degree of trust in these disclosures?

 

Please do note that, the research gap is vague and even references are not enough to justify the topic. follow and cite some recent research papers such as " 1) Production-based carbon emission, and transportationin China: probing the role of clean energy based on simulation and machine learning". 2) " Revolution of nuclear energy efficiency, economic complexity, air transportation and industrial improvement on environmental footprint cost: A novel dynamic simulation approach". 3) Is public service transportation increase environmental contamination in China? The role of nuclear energy consumption and technological change. 4) . Asymmetric impacts of public service “transportation” on the environmental pollution in China 

Comments on the Quality of English Language

Extensive editing of English language required

Author Response

Dear reviewer,

You can find explanations regarding your revision requests in the attachment. Thank you for your valuable contributions.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

I'm satisfied with the revision. I have no further comments.

Reviewer 3 Report

Comments and Suggestions for Authors

the authors have done great work so the paper is accepted for publication