Document Type : Original Article
Authors
1
PhD student, Department of Accounting, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran.
2
Associate Professor, Department of Accounting, Faculty of Management and Economics, Tarbiat Modares University, Tehran, iran
3
3Associate Professor, Department of Accounting, Faculty of Management and Economics, Tarbiat Modares University, Tehran, iran.
10.22034/api.2026.2094244.1868
Abstract
Objective: This research aimed to examine the asymmetric impact of sustainability reporting on the financial performance of companies listed on the Iraq Stock Exchange (ISX) between 2018 and 2023. It sought to clarify the role of environmental, social, and governance (ESG) dimensions in either enhancing or undermining corporate financial performance.
Method: The statistical population comprised active companies on the Iraq Stock Exchange that maintained complete and consistent financial and sustainability data. Financial data included accounting-based indicators (Return on Assets, Return on Equity, and Earnings Per Share) and market-based indicators (Tobin's Q and Firm Value). Sustainability data were collected across the three dimensions of environmental, social, and governance practices. Data analysis was conducted using Structural Equation Modeling (SEM) and fuzzy logic-based multi-criteria methods to identify direct, indirect, and asymmetric relationships.
Results: The results indicated that various dimensions of sustainability reporting have a positive yet asymmetric impact on financial performance. Specifically, in some firms with low sustainability indices, high financial performance was observed; conversely, some firms with substantial investments in sustainability failed to achieve favorable financial returns. These findings highlight the complexity of the relationship between sustainability and financial performance, as well as its dependence on internal firm conditions and moderating factors such as industry type, firm size, and market stability. Furthermore, it was determined that the comprehensive and strategic implementation of sustainability policies can improve financial performance, equity value, and market position, whereas superficial or incomplete approaches may prove costly.
Conclusions: This study emphasizes the importance of multidimensional analysis, consideration of contextual conditions, and the institutionalization of a culture of sustainability within organizations. The findings suggest that sustainability should be integrated as a strategic component into organizational decision-making and financial management. The results of this research can be useful for managers, investors, and policymakers in formulating effective and realistic strategies for enhancing both sustainability and financial performance.
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