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CPA-AGRC and Management Research Seminar Series

The effects of the EU Non-Financial Reporting Directive (NFRD) on sustainability practices and performance

Date & Time

November 20, 2020


Zoom - link provided in reminder email the day before the event

***M.Sc. Students in Management, this event can count towards one of the six mandatory Research Seminars Series needed to attend (MGT6991).***

Silvia Gaia, PhD.

Senior Lecturer in Accounting, Essex Business School

This study examines the effects of the 2014 European Union (EU) Non-Financial Reporting Directive (NFRD) on firms’ CSR practices and performance, financial performance and operating expenses. Using a sample of 4,865 EU and US firm-year observations spanning the period 2011-2018 and employing a difference-in-differences research design with propensity-score matching, our findings show that the EU NFRD increased the CSR transparency of EU firms by increasing the disclosure of CSR practices using sustainability reports and/or following the Global Reporting Initiative (GRI) framework. Moreover, our findings show that the EU NFRD increased both social and environmental performance in these firms. Interestingly, our findings also show that while the publication of sustainability reports increased significantly more during the mandatory phase, there are no significant differences on other sustainability practices between the two periods (voluntary and mandatory) in which the implementation of the EU Directive was phased. Finally, our findings show that the increase in EU firms’ CSR transparency following the introduction of the EU NFRD seems to lead to an increase in financial performance and a decrease in operating expenses. Our results show that this evidence is particularly strong for firms that started adopting CSR reporting during the voluntary phase of adoption. Our findings are supported by a series of robustness tests.

About the Speaker

Silvia Gaia is a Senior Lecturer in Accounting at Essex Business School. She previously worked as Lecturer in Accounting at the University of Cagliari (Italy) and held visiting scholar positions at the University of Birmingham (UK), HEC Montréal (Canada) and Columbia Business School (USA). Silvia’s research work mainly relates to social and environmental accounting and reporting and Corporate Governance. She has publications in academic journals such as Accounting, Auditing and Accountability Journal, British Accounting Review, Journal of Business Ethics and International Business Review.. She is a member of the Editorial Board of Accounting Forum. 

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