Sustainability Reporting in Slovenia: Does Sustainability Reporting Impact Financial Performance?

  • Anja Ermenc
  • Monika Klemenčič
  • Adriana Rejc BuhovacEmail author
Part of the MIR Series in International Business book series (MIRSIB)


The study aims to clarify the link between corporate sustainability and financial performance where corporate sustainability reporting is used as a proxy for sustainability. By voluntary reporting on corporate sustainability, firms try to minimize political/social costs and benefit from long-term relations with key stakeholders, minimizing risks of burdensome environmental and labor regulation, attracting and keeping best talents, enhancing firm reputation, and broadening the customer base. We use regression analysis on a sample of 80 Slovenian companies. Results indicate that corporate sustainability leads to better financial performance in the first year, in the second year, and in the first 3 years after measuring corporate sustainability while controlling for size, indebtedness, industry, and quotation. The study does not find a link between average historical financial performance and subsequent level of corporate sustainability, indicating that the relationship is one sided. The study includes implications for managers for making informed resource allocations toward corporate sustainability and understanding the sustainability business case.


Financial Performance Stock Exchange Positive Link Corporate Sustainability Sustainability Reporting 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Abbott, W. F., & Monsen, R. J. (1979). On the measurement of corporate social responsibility: Self-reported disclosures as a method of measuring corporate social involvement. Academy of Management Journal, 22(3), 501–515.CrossRefGoogle Scholar
  2. Bhattacharya, C. B., & Sen, S. (2004). Doing good at doing better: Whey, why and how customers respond to corporate social initiatives. California Management Review, 47(1), 9–24.CrossRefGoogle Scholar
  3. Dagilienė, L. (2013). The influence of corporate social reporting to company’s value in a developing economy. Procedia Economics and Finance, 5, 212–221.CrossRefGoogle Scholar
  4. Epstein, M. J., & Rejc Buhovac, A. (2015). How sustainability leaders are implementing sustainability. The European Financial Review, April–May: 48–52.Google Scholar
  5. Fauzi, H. (2009). Corporate social and financial performance: Empirical evidence from American companies. Indonesia: Sebelas Maret University.Google Scholar
  6. Fernández-Feijóo Souto, B. (2009). Crisis and corporate social responsibility: Threat or opportunity? International Journal of Economic Sciences and Applied Research, 2(1), 36–50.Google Scholar
  7. Freedman, M., & Jaggi, B. (1988). An analysis of the association between pollution disclosure and economic performance. Accounting, Auditing & Accountability Journal, 1(2), 43–58.CrossRefGoogle Scholar
  8. Freeman, E. R. (1984). Strategic management: A stakeholder approach. Boston: Pitman Publishing.Google Scholar
  9. Griffin, J. J., & Mahon, J. F. (1997). The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research. Business and Society, 36(1), 5–31.CrossRefGoogle Scholar
  10. Gurvitš, N., Startseva, E., Strouhal, J., & Nikitina-Kalamae, M. (2015). Finding the link between CSR reporting and corporate financial performance: Evidence on Czech and Estonian listed companies. Central European Business Review, 3(12), 48–59.Google Scholar
  11. Johansson, S., Karlsson, A., & Hagberg, C. (2015). The relationship between CSR and financial performance. Kalmar: Linneaus University.Google Scholar
  12. Klemenčič, M. (2012). Analiza informacij o družbeno odgovornem poslovanju v letnih poročilih slovenskih podjetij [Analysis of information on socially responsible operations in annual reports of Slovenian companies]. Ljubljana: Ekonomska fakulteta.Google Scholar
  13. Mahoney, L., & Roberts, R. W. (2007). Corporate social performance, financial performance and institutional ownership in Canadian firms. Accounting Forum, 31, 233–253.CrossRefGoogle Scholar
  14. Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social iniciaties by business. Administrative Science Quartery, 48(2), 268–305.CrossRefGoogle Scholar
  15. McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate social responsibility and firm financial performance. Academy of Management Journal, 31(4), 854–872.CrossRefGoogle Scholar
  16. McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 21, 603–609.CrossRefGoogle Scholar
  17. Mulligan, T. (1986). A Critique of Milton Friedman’s essay ‘the social responsibility of business is to increase its profits’. Journal of Business Ethics, 5(4), 265–269.CrossRefGoogle Scholar
  18. Murray, K. B., & Vogel, C. M. (1997). Using a hierarchy-of-effects approach to gauge the effectiveness of corporate social responsibility to generate goodwill toward the firm: Financial versus nonfinancial impacts. Journal of Business Research, 38(2), 141–159.CrossRefGoogle Scholar
  19. Orlitzky, M. (2001). Does firm size confound the relationship between corporate social performance and firm financial performance? Journal of Business Ethics, 33(2), 167–180.CrossRefGoogle Scholar
  20. Orlitzky, M., & Benjamin, J. D. (2001). Corporate social performance and firm risk: A meta-analytic review. Business & Society, 40(4), 369–396.CrossRefGoogle Scholar
  21. Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24(3), 403–441.CrossRefGoogle Scholar
  22. Peloza, J., & Papania, L. (2008). The missing link between corporate social responsibility and financial performance: Stakeholder salience and identification. Corporate Reputation Review, 11(2), 169–181.CrossRefGoogle Scholar
  23. Perini, F., Russo, A., Tecanti, A., & Vurro, C. (2009). Going beyond a long-lasting debate: What is behind the relationship between corporate social and financial performance? Milan: Bocconi School of Management.Google Scholar
  24. Poelloe, A. (2010). Is there a trade-off between social responsibility and financial performance? Rotterdam: Erasmus University Rotterdam.Google Scholar
  25. Preston, L. E., & O’Bannon, D. P. (1997). The corporate social-financial performance relationship. Business and Society, 36(4), 419–429.CrossRefGoogle Scholar
  26. Shane, P. B., & Spicer, B. H. (1983). Market response to environmental information produced outside the firm. The Accounting Review, 58(3), 521–538.Google Scholar
  27. Slapničar, S. (2004). Poročanje o družbeni odgovornosti [Reporting on corporate social responsibility]. V S. Prašnikar (ur.), Razvojnoraziskovalna dejavnost ter inovacije, konkurenčnost in družbena odgovornost podjetij [R&D and innovation, competitive advantage, and CSR], (519–542). Ljubljana: Finance.Google Scholar
  28. Stanwick, P. A., & Stanwick, S. D. (1998). The relationship between corporate social performance and organizational size, financial performance, and environmental performance: An empirical examination. Journal of Business Ethics, 17(2), 195–204.CrossRefGoogle Scholar
  29. Sun, L. (2012). Further evidence on the association between corporate social responsibility and financial performance. International Journal of Law and Management, 54(6), 472–484.CrossRefGoogle Scholar
  30. Svetlič, N. (2008). Odziv potrošnikov na družbeno dogovorna dejanja podjetij [Consumer response on corporate social responsibility]. Ljubljana: Fakulteta za družbene vede.Google Scholar
  31. Tsoutsoura, M. (2004). Corporate social responsibility and financial performance. Berkeley: Haas School of Business, University of California.Google Scholar
  32. Ullmann, A. A. (1985). Data in search of a theory: A critical examination of a relationship among social performance, social disclosure, and economic performance of U.S. firms. Academy of Management Review, 10(3), 540–557.Google Scholar
  33. Van der Laan, G., Van Ees, H., & Van Witteloostuijn, A. (2008). Corporate social and financial performance: An extended stakeholder theory, and empirical test with accounting measures. Journal of Business Ethics, 79(3), 299–310.CrossRefGoogle Scholar
  34. Vintila, G., & Duca, F. (2013). A study of the relationship between corporate social responsibility, firm siye and financial performance. Revista Română de Statistică Trim, 1, 62–67.Google Scholar
  35. Vizetič, N. (2011). Correlation between social responsibility and efficient performance in Croatian enterprises. Zbornik Radova Ekonomskog Fakulteta u Rijeci, 29(2), 423–442.Google Scholar
  36. Waddock, S. A., & Graves, S. B. (1997). The corporate social performance—Financial performance link. Strategic Management Journal, 18(4), 303–319.CrossRefGoogle Scholar
  37. Zaborek, P. (2014). CSR and financial performance: The case of polish small and medium manufacturers. International Journal of Management and Economics, 43, 53–73.Google Scholar

Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  • Anja Ermenc
    • 1
  • Monika Klemenčič
    • 1
  • Adriana Rejc Buhovac
    • 1
    Email author
  1. 1.Faculty of Economics, Academic Unit for Management and OrganizationUniversity of LjubljanaLjubljanaSlovenia

Personalised recommendations