Sustainability Reporting and Abnormal Operating Cash Flows of Multinational Corporations in Sub-Saharan Africa

Author(s)

Rufus I. Akintoye , Folajimi Festus ADEGBIE , Ibukun FALAYI ,

Download Full PDF Pages: 17-31 | Views: 384 | Downloads: 93 | DOI: 10.5281/zenodo.5824495

Volume 10 - December 2021 (12)

Abstract

The conventional annual report and accountsmay contain elements of earnings management (abnormal operating cash flows) which is often hidden and not easily discernible. Annual report and accountshas been criticized severally for lacking the capacity to present the genuine picture of an organization impacts on the operational environment and support strategic allocation of resources in in a dynamic environment. The paper, therefore, investigated the effect of sustainability reporting as a panacea for abnormal operating cash flows among multinational corporations in Sub-Saharan Africa. Adopting the ex-post facto research design, all the 48 multinational companies in the sub-Saharan African countries constituted the study’s population. Purposive sampling technique was used by selecting 5 multinational companies from each of the 10 countries based on data availability. The data for the period 2010-2019 were derived from the published annual financial reports of the sampled multinational companies and the sustainability reports in line with the Global Reporting Initiatives (GRI). The study revealed that sustainability reporting had joint significant impact on abnormal operating cash flows of multinational corporations in Sub-Saharan Africa, (Adj. R2 = 0.37, W(6, 444) = 517.44, P<.05) establishing the fact that sustainability reporting exerted significant influence on the abnormal operating cash flows of the earnings management of multinational corporations in Sub-Sahara Africa. The paper provided evidence that the lag of abnormal operating cash flows, environmental sustainability reporting and corporate governance sustainability reporting’s association with abnormal operating cash flows was positive, while social sustainability reporting and economic sustainability reporting were negatively linked to abnormal operating cash flows.The study recommended that management of multinational corporations in sub-Saharan African should ensure strict compliance with sustainability reporting in all its ramifications so as to improve their earnings quality and de-emphasize earnings management practices.

Keywords

Abnormal operating cash flows, corporate governance reporting, earnings management, economic reporting, environmental reporting, social reporting and sustainability reporting.

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Rufus I. Akintoye, Sustainability Reporting and Abnormal Operating Cash Flows of Multinational Corporations in Sub-Saharan Africa, International Journal of Management Sciences and Business Research 12(2021):17-31 DOI: 10.5281/zenodo.5824495