Abstract:
Purpose: The study examines how firm characteristics moderates the relationship between corporate
sustainability reporting and financial performance of companies listed at the Nairobi Securities Exchange.
Methodology: The target population comprised sixty-seven listed firms in Kenya. Secondary data was
collected from published financial reports and company accounts filed at the Capital Markets Authority as
at 31 December, 2020. Out of the sixty-seven companies, only forty-nine companies met the data
requirement of the study. The study applied the Global Reporting Initiative framework establish the
corporate sustainability reporting scores and the sustainability reporting index. Inferential and descriptive
analysis was performed by E-views and SPSS. Moderation effect analysis was guided by Baron and Kenny
(1986) steps of moderation.
Findings: Based on the study’s findings, it was established that firm size has a statistically positive
moderation effect on the relationship between the corporate sustainability reporting and the ROA.
Additionally, the study also found out that the firm age has a statistically negative moderation on the
corporate sustainability reporting-ROA relationship.
Implications: The managers and board of directors of corporates gain insight from the study results and
use the findings as a justification towards aggressively engaging in corporate sustainability reporting and
disclosures. The results show that companies that participate in sustainability reporting have a larger and
a growing asset base, have a long standing and/or going concern and they tend to make high quality
sustainability reports and disclosures. The findings also show that older companies were slow in reporting
on sustainability reporting. Newer firms were aggressively participating in corporate sustainability
reporting compared to older firms. The older firms were slow in adopting the corporate sustainability
reporting concept and therefore there is a need make reporting on sustainability mandatory for all listed
and non-listed companies. Further research can be extended to include other firm characteristic indicators
such as firm liquidity and leverage. Further research can also be extended to include other moderators
such as organization culture and stakeholder management. Research can also be extended to test the effect
of corporate sustainability reporting on ROE, ROI, ROCE, Sales growth and Tobin’s Q as other financial
performance measures.
