THE IMPACT OF FINANCIAL PERF'ORMANCE ON THE SUSTAINABILITY PERFORMANCE OF'' THE LISTED COMPANIES IN SRI LANKA

Abstract

The purpose of this research is to investigate the impact of financial performance on the sustainability performance of listed companies in Sri Lanka. The research evaluates the impact of Return on Equity, Return on Sales and Return on Assets as the financial performance on the sustainability performance including of Listed Companies in Sri Lanka. It was able to identify the level of disclosures on Sustainability performance is lower than the expectation and with the comparison of foreign listed entities. As the sustainability disclosure is not a mandatory part to be provided in annual reports and the number of voluntarily disclosing the performances are very low. Thus, out of 290 listed companies 20 Listed Companies with Sustainability reporting specially with regards to the past five years from 2015 to 2019 has been selected for the analysis purpose. All these companies fellow either the GRI G4 or Cent guidelines. Then this study considers secondary data collected from the annual reports both from the Financial and Non-Financial reporting. For the purpose of analysis Descriptive statistics, Regression analysis and correlation tests have been conducted. The Findings show that there is a strong positive relationship between the financial performances including ROA, ROS and sustainability performances. At the same time the ROE consists of a negative impact on sustainability performance. By referring to the previous research findings it could be identified there is a bi-directional causality among the financial performance and sustainability performance. Thus, the consideration either on sustainability performance or on financial performance a company can achieve a positive vibe over the years