Incremental value relevancies in the development of reporting of sustainability performance

Sustainability reporting was introduced after financial reporting to meet the social and environmental informational needs of stakeholders, while integrated reporting was initiated to integrate financial reporting and sustainability reporting to advance the decision usefulness of corporate disclosure practices. Despite claims and evidence of the value relevance of each reporting framework exclusively, studies on the incremental value relevancies of these subsequent disclosure practices have been sparse. Using a sample of firms from the Johannesburg Stock Exchange from 2011 to 2020 and firms’ capital market liquidity performance, this study finds that sustainability reporting and integrated reporting are not only value-relevant disclosure practices but also offer incremental value relevancies. Sustainability reporting provides incremental value relevance over financial reporting, and integrated reporting offers incremental value relevance over financial reporting and sustainability reporting. However, the findings do not find support for integrated reporting to replace the practices of financial reporting and sustainability reporting and affirm the contribution of each of the three reports in the corporate reporting space.