Article: Environmental, social and governance reporting quality and firm lag vs. lead performance: evidence from Sri Lankan listed companies Journal: International Journal of Business Excellence (IJBEX) 2026 Vol.38 No.7 pp.1 - 21 Abstract: ESG reporting is now standard practice, yet its performance implications remain contested. Prior studies have been largely fragmented, taking a biased stance on selected ESG dimensions or focusing on financial lag indicators with little interest in lead indicators, resulting in an incomplete understanding of ESG disclosures and their impact. Using five-year panel data from 60 listed firms, this paper fills these gaps. Following the 2023 GRI guidelines, four disclosure quality indices, both individual and composite, are constructed and examined against lag indicators (ROA, ROE, ROS) and a lead indicator, MV. Findings reveal that composite ESG acts as a signal of value creation with a stronger correlation with ROS and MV. However, when disaggregated, possible temporal differences emerge, with environmental reporting primarily associated with lead and the other two with lag indicators, suggesting that ESG disclosure is part of an intentional strategy rather than a response to external pressures. Inderscience Publishers - linking academia, business and industry through research

Title: Environmental, social and governance reporting quality and firm lag vs. lead performance: evidence from Sri Lankan listed companies

Authors: S.S.J. Patabendige; L.M. Kasthuriarachchi; P.U.S. Fernando; S.A.C.L. Senarath

Addresses: Department of Marketing Management, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka ' Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka ' Department of Marketing Management, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka ' Department of Commerce and Financial Management, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka

Abstract: ESG reporting is now standard practice, yet its performance implications remain contested. Prior studies have been largely fragmented, taking a biased stance on selected ESG dimensions or focusing on financial lag indicators with little interest in lead indicators, resulting in an incomplete understanding of ESG disclosures and their impact. Using five-year panel data from 60 listed firms, this paper fills these gaps. Following the 2023 GRI guidelines, four disclosure quality indices, both individual and composite, are constructed and examined against lag indicators (ROA, ROE, ROS) and a lead indicator, MV. Findings reveal that composite ESG acts as a signal of value creation with a stronger correlation with ROS and MV. However, when disaggregated, possible temporal differences emerge, with environmental reporting primarily associated with lead and the other two with lag indicators, suggesting that ESG disclosure is part of an intentional strategy rather than a response to external pressures.

Keywords: environmental; social; governance; ESG disclosures; lead indicators; lag indicators; organisational performance; GRI guidelines; Sri Lanka.

DOI: 10.1504/IJBEX.2026.152018

International Journal of Business Excellence, 2026 Vol.38 No.7, pp.1 - 21

Received: 03 Dec 2025
Accepted: 21 Dec 2025
Published online: 02 Mar 2026 *

Title: Environmental, social and governance reporting quality and firm lag vs. lead performance: evidence from Sri Lankan listed companies

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