Investigating the relationship between management profit forecasting and sustainability reporting

Document Type : Original Article

Authors

1 Prof, Department of Accounting, Faculty of Social Sciences and Economics, Al-Zahra University, Tehran, Iran

2 Ph.D. Candidate in accounting, Faculty of Social Sciences and Economics, Al-Zahra University, Tehran, Iran

Abstract

Objective: Management profit forecast is one of the most important voluntary disclosures for providing valuable financial information and since companies use various communication tools to interact with information users, beyond the mandatory disclosure frameworks, including two common types of voluntary disclosure including management profit forecast and bio sustainability disclosure. environmental, social and governance, but there is still no clear understanding of how these two different types of voluntary disclosures interact when managers decide which disclosures to provide to create an integrated reporting system that serves their interests. The purpose of this research is to investigate the relationship between management profit forecasting and sustainability reporting.
Methods: The intended research is based on the applied purpose and descriptive correlation type. The statistical research population of all the companies admitted to the Tehran Stock Exchange and the time period including 13 consecutive years from 2011 to 2023 with a sample of 120 companies (1560 years-companies) and using multivariable linear regression was used.
Results: The results of the findings showed that there is a significant and direct relationship between management profit forecasting and sustainability reporting (environmental, social and governance performance) and somehow, with the increase in management profit forecasting, the company's sustainability reporting also increases.
Conclusion: While managers often struggle between two types of disclosures (management profit forecasting and sustainability reporting), publishing both types of disclosures provides more informative insights for users' decision-making than publishing only one type or none at all. In particular, direct evidence was provided that companies that stop issuing management profit forecasts are less likely to publish sustainability reports.
Innovation: This study examines the relationship between sustainability reporting and earnings management, and their combined impact on stock markets. Unlike prior research focusing solely on voluntary financial or non-financial disclosures, it considers the joint effects of these disclosures on information provision. It explores how managers balance relative costs, potential risks, and incentives in shaping voluntary disclosure strategies. The findings provide insights into how companies respond to ESG reporting requirements and the interaction between earnings management and sustainability disclosures in integrated reporting systems.

Keywords

References

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History

  • Receive Date: 04 December 2024
  • Revise Date: 06 February 2025
  • Accept Date: 07 March 2025
  • First Publish Date: 23 August 2025
  • Publish Date: 23 August 2025

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