Institutional investors’ impact on sustainability disclosure: exploring the moderating role of financial performance

Abstract

Purpose

This paper aims to investigate the relationship between institutional investors and sustainability disclosure, specifically examining the impact of financial performance as a moderator variable on the relationship between institutional investors and sustainability disclosure.

Design/methodology/approach

This paper used a panel data set of 51 firms from the industrial sector listed in the Amman Stock Exchange, with a total of 459 observations during 2013–2021. Multiple regression models were used to test the direct and moderating relationships.

Findings

The findings of this paper indicate that institutional investors exhibit varying attitudes toward sustainability disclosure. Institutional investors have a positive and significant impact on firm sustainability disclosure. Furthermore, the relationship between institutional investors and sustainability disclosure is significantly influenced by financial performance.

Social implications

The study’s findings encourage regulators to enhance firms’ awareness of sustainability disclosures by balancing the economic, social and environmental pillars. This can be achieved by conserving natural resources, protecting the environment and promoting social justice for future generations.

Originality/value

The paper’s insights can be valuable for policymakers’ sustainable practices by encouraging institutional investors to support sustainability activities actively.

Citation

Alkurdi, A., Bataineh, H., Al Tarawneh, E.M. and Khatib, S.F.A. (2024), "Institutional investors’ impact on sustainability disclosure: exploring the moderating role of financial performance", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-02-2024-0112