The Impact of Sustainability Reporting on the Earnings Response Coefficient of the Iraqi-Listed Companies

This study examines the impact of sustainability reporting on the Earnings Response Coefficient (ERC) of companies listed on the Iraq Stock Exchange. The ERC reflects the effect of unexpected earnings on stock returns, and sustainability reporting is expected to enhance company legitimacy and trust, potentially increasing the ERC. Despite the growing importance of sustainability practices, there is limited research on their influence on the ERC in emerging markets like Iraq. Using data from 33 firms from 2012-2022 and employing multiple linear regression with panel data analysis, the results indicate that Iraqi companies experience only slight improvements in ERC through sustainability reporting. These findings suggest that sustainability reporting can enhance a company's reputation and legitimacy, contributing to increased ERC. The study highlights the need for policymakers to strengthen sustainability reporting requirements and provides insights for investors seeking to optimize portfolios based on corporate sustainability compliance.