Reporting practices in Romania: Propelling corporate sustainability forward through firm performance

In the context of growing global emphasis on sustainable business practices, understanding the financial drivers of corporate sustainability has become increasingly important. This study examines key financial and market indicators to understand their influence on corporate sustainability disclosure. Focusing on Romanian companies, it investigates how market share, financial ratings, probability of insolvency, and market value shape sustainability outcomes. The dataset was sourced from Azores Sustainability and CSR Services, a well-known organization in Romania that offers insights into the Romania Corporate Sustainability and Transparency Index, as well as from the Risco database. Over an eight-year period from 2016 to 2023, we compiled a total of 264 observations from 33 companies that provided sustainability information. Correlation and regression analysis were used as inferential statistics to achieve the study’s objectives. The findings reveal that market share has a positive and significant impact on corporate sustainability disclosure. Additionally, the study shows that financial ratings significantly and positively influence corporate sustainability. The study’s results indicate that probability of insolvency has a negative and significant effect on corporate sustainability disclosure. Moreover, market value was found to have a significant positive impact on corporate sustainability disclosure. The findings of the study underscore the relevance of firm performance in influencing Romanian companies’ sustainability disclosure following the provisions of Corporate Sustainability Reporting Directive (CSRD) and 2014/95/EU Directive. Ultimately, this study proves essential in the context of the CSRD, which plays a critical role in enhancing corporate transparency regarding sustainability practices. The key contribution of this study is to address the ambiguity in existing research by exploring the reverse relationship, how firm performance influences corporate sustainability outcomes.