A Correlational Study of U.S. Oil and Gas Firm Sustainability Disclosure and Financial Performance

The purpose of this non-experimental quantitative correlational study was to (a) assess associations between extent of corporate social responsibility (CSR) and five firm-specific characteristics and (b) to assess determinants of CSR disclosure for varying levels of disclosure. Evaluation was performed for level of CSR disclosures in U.S.-based oil and gas multinational corporations (MNCs) listed on Dow Jones Sustainability Index (DJSI). The sample included 105 U.S.-based oil and gas MNCs listed on DJSI for between the years 2009 and 2014. Archival data were gathered from the firm's annual reports form 10-K as filed with the Securities and Exchange Commission (SEC). Four significant associations were found among sustainability disclosure and five firm specific characteristics of (a) yearly capital profit/loss (CPQL), (b) yearly shareholder dividend yield (CQSD), (c) return on sales (CROS), (d) price to book ratio (CPBR), and (e) firm size (CSZE). Null hypothesis 1, that assessed financial metrics specific to the U.S.-based oil and gas MNCs and sustainability disclosure, was rejected as one significant regression model was found to explain 55.1% of variance of sustainability disclosure index (DSCORE) (p < 0.05). Hypothesis 2 results found CSZE was found to be significant predictor of DSCORE (p < 0.05). Recommendations for practice included (a) U.S.-based oil and gas MNCs provide narratives about best practices of CSR disclosures in annual reports and identify a designated individual responsible for firm's CSR initiatives, (b) regulators in U.S.-based oil and gas industry formulate CSR disclosure governance code for best practices and standard operating procedures (SOPs), (c) U.S.-based oil and gas MNCs provide detailed CSR disclosure in annual reports to reduce information asymmetry and enhance investor confidence, (d) regulators enforce sustainability compliance provisions rigorously for U.S.-based oil and gas MNCs to have desired levels of sustainability governance mechanisms. Recommendations for future research included (a) a qualitative study with U.S.-based oil and gas MNCs senior management and board members to explore experiences and perceptions of implementation of sustainability disclosure and firm performance, (b) a quantitative correlational study to further explore additional financial performance resource factors that explain the sustainability disclosure for U.S.-based oil and gas MNC firms, and (c) a causal comparative study to examine the influence of firm size, price to book ratio and yearly shareholder dividends on the levels of both voluntary and mandatory disclosure levels.