The relationship between stock prices and company performance of firms listed at Nairobi securities exchange that engage in sustainability reporting

Abstract

Sustainability reporting and company performance are the two factors that need to be studied in recent years. Sustainability Reporting is a nonfinancial report that consists of three elements which are economic performance, environmental performance, and social performance. The objective of the study was to establish whether there exists a relationship between stock prices and company performance for firms that engage in sustainability reporting. The research attempted to examine the relationship between stock prices and company performance of firms engaged in sustainability reporting as a whole. It consisted of 12 companies listed on Nairobi Securities exchange during the period of year 2012-2014. The researcher used secondary data collected from Nairobi securities exchange and used Statistical Package for Social Sciences (SPSS) to analyze. The findings were that the coefficient of variable demonstrates that the stock prices have positive association to Return on Assets (ROA). Hence, the result of this research shows that the stock prices of firms that engage in sustainability reporting does influence a company‟s performance. This concurs well with Hubbard (2008) in that investors are increasingly seeking to invest in socially responsible investments (SRI) in those companies deemed to be following good social and environmental practices. Naturally, a company which is sustainable will be less risky than one which is not.