The Impact of Changes and Ranking Discrepancies in Sustainability Reporting on Stock Returns

Articles in Press

Document Type : Original Article

Author

• Khadijeh Khodabakhshi parijan

Department of humanities, west tehran branch, islamic azad university, tehran, iran

10.22067/ijaaf.2025.92362.1534

Abstract

Recently, sustainable investing has attracted considerable interest from investors,

researchers, and politicians. In this context, both sustainable investing strategies and academic

research seek to evaluate the sustainability reporting performance of different organizations.

Despite the focus on sustainability reporting, the temporal fluctuations in such reporting and the

inconsistencies among other sustainability reports and their influence on stock returns remain an

empirical inquiry. Thus, this study aimed to analyze the impact of variations and ranking

inconsistencies in sustainability reporting on stock returns. Consequently, 130 firms listed on the

Tehran Stock Exchange from 2015 to 2022 were examined utilizing multivariate modeling and

Eviews 9 software. The findings indicated that sustainability reporting, measured by the ESG,

CSP, and CSR indices, significantly influenced stock returns. Furthermore, the influence of these

three sustainability reporting indexes on prospective stock returns was comparatively more

pronounced. Moreover, the effect of these three sustainability reporting indexes on the following

stock performance was somewhat more substantial. The results revealed that inconsistencies in

sustainability reporting rankings, derived from different sustainability reports, adversely and

significantly impacted both present and future stock returns. Therefore, investors and market

participants should consistently regard sustainability reporting, along with alterations and

inconsistencies in various rankings, as a matter of concern. This study could help to lower

investor uncertainty about sustainability reporting and encourage sustainable investment by

concentrating on the changes in sustainability reporting rankings and their effect on stock

returns. Furthermore, this study included how future stock returns are affected by variations in

sustainability reporting rankings.

Keywords

• Sustainability Reporting
• Ranking Discrepancies
• Stock Returns

Main Subjects

• Accounting

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