Examining the extent of and drivers for materiality assessment disclosures in sustainability reports

Muhammad Bilal Farooq, Rashid Zaman, Dania Sarraj, Fahad Khalid

Research output: Contribution to journalArticlepeer-review

31 Citations (Scopus)


Purpose: This paper aims to evaluate the extent of materiality assessment disclosures in sustainability reports and their determinants. The study examines the disclosure practices of listed companies based in the member states of the Cooperation Council for the Arab States of the Gulf, colloquially referred to as the Gulf Cooperation Council (GCC). Design/methodology/approach: First, the materiality assessment disclosures were scored through a content analysis of sustainability reports published by listed GCC companies during a five-year period from 2013 to 2017. Second, a fixed effect ordered logic regression was used to examine the determinants of materiality assessment disclosures. Findings: While sustainability reporting rates improved across the sample period, a significant majority of listed GCC companies do not engage in sustainability reporting. The use of internationally recognised standards has also declined. While reporters provide more information on their materiality assessment, the number of sustainability reports that offer information on how the reporter identifies material issues has declined. These trends potentially indicate the existence of managerial capture. Materiality assessment disclosure scores are positively influenced by higher financial performance (Return on Assets), lower leverage and better corporate governance. However, company size and market-to-book ratio do not influence materiality assessment disclosures. Practical implications: The findings may prove useful to managers responsible for preparing sustainability reports who can benefit from the examples of materiality assessment disclosures. An evaluation of the materiality assessment should be included in the scope of assurance engagements and practitioners can use the examples of best practice when evaluating sustainability reports. Stock exchanges may consider developing improved corporate governance guidelines as these will lead to materiality assessment disclosures. Social implications: The findings may assist in improving sustainability reporting quality, through better materiality assessment disclosures. This will allow corporate stakeholders to evaluate the reporting entities underlying processes, which leads to transparency and corporate accountability. Improved corporate sustainability reporting supports the GCC commitment to implement the United Nations Sustainable Development Goals and transition to sustainable development. Originality/value: This study addresses the call for greater research examining materiality within a sustainability reporting context. This is the first paper to examine sustainability reporting quality in the GCC region, focussing particularly on materiality assessment disclosures.

Original languageEnglish
Pages (from-to)965-1002
Number of pages38
JournalSustainability Accounting, Management and Policy Journal
Issue number5
Publication statusPublished - 2021
Externally publishedYes


  • Corporate governance
  • Gulf cooperation council (GCC)
  • Managerial capture
  • Materiality assessment
  • Sustainability reporting

ASJC Scopus subject areas

  • Accounting
  • Renewable Energy, Sustainability and the Environment
  • General Business,Management and Accounting


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