Effect of Sustainability Disclosure on Market Performance of Coca Cola

Running head: EFFECT OF SUSTAINABILITY DISCLOSURE OF MARKET
PERFORMANCE OF COCA COLA
Effect of Sustainability Disclosure onf Market Performance of Coca Cola
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EFFECT OF SUSTAINABILITY DISCLOSURE OF MARKET PERFORMANCE OF
COCA COLA
Table of Contents
1.0Introduction.................................................................................................................................2
1.1 Definition...............................................................................................................................2
1.2 Background of the research...................................................................................................2
1.3 Aim of the research................................................................................................................3
1.4. Research Questions...............................................................................................................3
2.0 Literature Review......................................................................................................................3
2.1 Importance of sustainability reporting...................................................................................3
2.2 Sustainability reporting and market performance..................................................................4
2.3 Hypothesis.............................................................................................................................5
3.0 Methodology..............................................................................................................................6
3.1 Data collection.......................................................................................................................6
3.2 Data analysis..........................................................................................................................6
4.0 Findings and Analysis................................................................................................................8
4.1 Descriptive statistics..............................................................................................................8
4.2. Bivariate correlation...........................................................................................................10
4.3 Regression............................................................................................................................11
5.0 Discussion................................................................................................................................13
5.1 H1: Sustainability reporting significantly influences Return on Assets of Coca – Cola.....14
5.2 H1: Sustainability reporting significantly influences Return on Equity of Coca – Cola.....15
6.0 Conclusion...............................................................................................................................15
6.1 Research aim and research question....................................................................................16
6.2 Limitation............................................................................................................................16
6.3 Recommendation.................................................................................................................17
7.0 Reference list.......................................................................................................................18

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EFFECT OF SUSTAINABILITY DISCLOSURE OF MARKET PERFORMANCE OF
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1.0Introduction
1.1 Definition
Sustainability report of a company implies a composite report consisting economic, social
and environmental impact resulted from daily operation of the organization (Ogundare, 2013) In
other word, the sustainability report is a representative model of governance and value of an
organization (Nor et al., 2016). It also represents interlinkage between strategy of a company and
its commitments towards achieving a sustainable economy (Loh, Thomas & Wang, 2017)
Market performance of a company covers the ultimate results of different policies
including relationship between selling price and cost, output size, relative progressiveness of the
company, production efficiency compared to its rivals and others (Eccles, Ioannou & Serafeim,
2014). Different indicators of market performance include markets share, profitability, revenue,
return on equity, return on assets and the like.
1.2 Background of the research
The sustainability reporting has now a days become one major issue concerning across
the world. The main objective of sustainable practice is to meet the needs to present generation
without sacrificing the potential ability of future generation (Golicic & Smith, 2013) In regard to
this, investor now place a considerable importance on non-financial performance of a company.
The issue of corporate sustainability attracts significant attention in the phase of increased
regulation and awareness among the stakeholder (Hsu et al., 2016).
The research study analyzes impact of sustainability disclosure on market performance of
Coca-Cola. It is an American Corporation engaged in manufacturing and retailing of non-
alcoholic beverages and syrups (coca-colacompany.com, 2018). The company accounts its

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sustainability reporting covering two major objectives of documentation and assessment of
environmental and social impact of the company (Cheng, Green & Ko, 2014) Additionally, the
company incorporates its sustainability disclosure in order to access the scope to communicate
regarding its progress of sustainability and efforts to stakeholders of the organization.
1.3 Aim of the research
The present paper aims at evaluating how sustainability disclosure of Coca-Cola affects
market performance of the company.
1.4. Research Questions
In order to accomplish the research aim following research questions are prepared.
Does sustainability disclosure of Coca – Cola have any effect on return of assets (ROA) of the
company?
Does sustainability disclosure of Coca – Cola affects return of equity (ROE) of the company?
2.0 Literature Review
2.1 Importance of sustainability reporting
Several scholarly researches successfully proved implication of sustainability reporting of
an organization in modern business world (Khan, Serafeim & Yoon, 2016). In studies related to
ranking of sustainability, bankers, analysts and other were asked to report rank on different
accounting data to understand the perceived importance of sustainability (Nekhili et al., 2017).
These studies concluded that sustainability reporting is mostly ranked as moderately important
for financial community (Lu et al., 2014). Study also founded that sustainability reporting
accounted a higher importance in financial world compared to many of the components that were
crucial in past and attracted considerable attention of the researchers (Ekwueme, Egbunike &

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Onyali, 2013) Sustainability reporting is considered as typically important as to represent
engagement and communication between an organization and its stakeholders. Stakeholders of a
company include shareholders, employees, investors, suppliers, community and government
(Andrikopoulos & Kriklani, 2013) It is of increasingly interesting for a company to know
sustainability practice of a company and performance of the company in managing impact of
sustainability on creating potential value of the company and mitigating future risks (Nobanee &
Ellili, 2016) This adds to the importance of sustainability reporting. The recent study confirmed
that senior directors and executives of a company now place great importance in handling issues
related to sustainability (Busch, Bauer & Orlitzky, 2016).
2.2 Sustainability reporting and market performance
Studies examining impact of sustainability reporting on market performance of an
organization used different aspects of market performance (Ng & Rezaee, 2015). One such study
examined the impact of social, environmental and ethical aspects on corporate performance for a
company named Alpha (Reimsbach & Hahn, 2015). The paper used measures like GRI,
guidelines for accountability and other reporting principles and concluded that for the selected
company social, environmental and ethical issues do not record much accountability to different
stakeholders (Kim & Lyon, 2014). Rather the evidences suggested a low accountability towards
sustainability reporting. Various external sources raised several questions regarding
stakeholders’ participation in reporting sustainability (Yusuf et al., 2013).
An empirical study analyzing importance of environmental disclosure revealed a positive
association between discretionary disclosure of a company and its environmental performance
(Chen, Feldmann & Tang, 2015). The paper made an extensive research design to study
importance of sustainability reporting. Results from past study questioned robustness of socio

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COCA COLA
political theories regarding prediction of environmental disclosure of a company. Analysis of this
study was based on the guidelines of Global Sustainability reporting. This study attempted to
assess the impact of environmental and social disclosure (Hahn & Kühnen, 2013). In this study,
191 firms were randomly chosen from five industries namely Pulp and Paper, Oil and Gas,
Metals and Mining, Chemicals and Utilities (Hahn & Lulfs, 2014). The chosen five industries
tend to have higher population propensity and subject to strict environment regulation in United
State in the last 30 years or more (Michelon, Boesso & Kumar, 2013). Literature based on public
listed companies in Malaysia suggested that there exists a significant and positive relation
between corporate social responsibility of these companies and institutional ownership.
2.3 Hypothesis
In order to analyze the two research questions following two hypotheses are developed.
Hypothesis 1
Null Hypothesis (HI0): Sustainability reporting of Coca- Cola has no statistically significant
impact on Return on Assets (ROA) of the company.
Alternative Hypothesis (H1A): Sustainability reporting of Coca-Cola has a statistically significant
impact on Return on Assets (ROA) of Coca-Cola.
Hypothesis 1
Null Hypothesis (H20): Sustainability reporting of Coca- Cola has no statistically significant
impact on Return on Equity (ROE) of the company.
Alternative Hypothesis (H2A): Sustainability reporting of Coca-Cola has a statistically significant
impact on Return on Equity (ROE) of Coca-Cola.