Assessing the Link Between Corporate Sustainability Practices Disclosure and Financial Performance
Empirical Insights from Pakistan's Islamic Banking Sector
DOI:
https://doi.org/10.48112/tibss.v4i2.1285Abstract
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The objective of this research is to examine the influence of corporate sustainability Practices disclosure (CSPD) on the financial performance within the Islamic banking sector of Pakistan. The research methodology utilized content analysis to collect pertinent data from the annual reports of all four fully-fledged Islamic banks operating in Pakistan during the period from 2010 to 2021. An innovative and comprehensive corporate sustainability practices disclosure index was formulated, drawing upon the Global Reporting Initiative (GRI) and the Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI) guidelines. The analysis employed Ordinary Least Squares, Panel Corrected Standard Errors, and Generalized Least Squares (GLS), with random-effects and fixed-effects estimators. The study reveals a statistically significant negative correlation between Corporate Sustainability Practices Disclosure (CSPD) and the financial performance of Islamic banks under investigation. Analysis of CSPD's various dimensions shows a positive impact of Environmental and Social aspects on performance, contrasting with the non-significant effect of the Economic dimension. This highlights a complex interplay among CSPD elements and their financial implications. These findings enrich the Islamic banking literature in Pakistan, providing actionable insights for stakeholders and policymakers, including AAOIFI, to refine CSPD strategies and standards.
Keywords:
Accounting and Auditing Organization, Corporate Sustainability Practices Disclosure, Global Reporting Initiative, Islamic Banking Sector in Pakistan, Islamic Financial InstitutionsReferences
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