The Relationship Between National Governance and Sustainable Development Goals Reporting: Evidence from Europe

Abstract

This dissertation examines the impact of national governance on the level of Sustainable Development Goals (SDGs) disclosure among 1,650 non-financial firms listed firms listed in 21 countries within the European Union for the years 2019 to 2024, amounting to 9,900 firm-year observation, quantitative research is used in this dissertation through a fixed-effects regression to examines the effect of national governance on the disclosure of Sustainable Development Goals (SDGs) in European companies. Financial information was extracted from Refinitiv Eikon, while the governance data was obtained from the Worldwide Governance Indicators (WGI). The results are controlled for six governance dimensions and important firm-level and macroeconomic variables. According to the empirical findings, national governance determinants have different effects on SDG reporting in Europe-based companies. First, voice and accountability, political stability, and rule of law are positively correlated with SDG reporting, and this can be explained through the impact of such factors as transparency, stability, and legal strength on firms' willingness to provide information related to sustainable development goals. Second, negative correlations have been found between regulatory quality and SDG reporting, as well as between control of corruption and SDG reporting, which confirms the substitution hypothesis. Finally, government effectiveness is not significantly related to SDG reporting. With respect to the control factors, positive relationships with SDG reporting are found for firm size, firm profitability, and CSR committees. The dissertation will contribute to existing knowledge through offering an elaborate examination of the dimensions of national governance and the varied effects of such governance on the voluntary SDG reporting of companies operating in Europe. In terms of policy implications, the research indicates that enhancing democracy and improving political stability could improve sustainable development disclosure. On the other hand, a well-developed environment for regulation might discourage voluntary disclosures by organizations, necessitating careful considerations when implementing policies under directives like CSRR