Dow Jones sustainability Mila Pacific Alliance index and financial performance of Latin America integrated market
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Abstract
Purpose – This study aims to determine the association between the companies’ financial indicators and the
Dow Jones Sustainability MILA Pacific Alliance Index (DJSMPAUP Index).
Design/methodology/approach – The study adopted a quantitative, explanatory level approach, based
on measuring the interactions between the financial performance ratios of these companies (return on assets,
return on equity, EBITDA margin and net margin) and sustainability index of MILA member countries. The
study used a non-experimental, retrospective, cross-sectional design, using observed data from the annual
period spanning 2017 to 2022 forMILAcompanies and includes analyses before and after COVID-19.
Findings – The estimates show a positive and statistically significant relationship between each company’s
financial indicator and the DJSMPAUP index for the period 2017 to 2022.
Research limitations/implications – The primary limitation of the study was the availability of data,
which restricted the use of more advanced statistical analyses, and the inclusion of many factors that can be
associated with DJSMPAUP. This constraint arose since the index was introduced only from the 2017 annual
period, resulting in a limited dataset.
Practical implications – The study sheds light on MILA’s companies and their characteristics and
specific conditions, which can help to improve sustainability strategies with an impact on financial
performance, primarily due to the significance of MILA in the world economy and the GDP of Latin America.
It focuses on an emerging market with a few years of applying sustainability policies.
Social implications – This study contributes to revealing the progress in sustainability for member
companies in MILA.
Originality/value – The study connects the financial performance and the sustainability of organizations
oriented to the emerging significance of MILA in the world economy.
Keywords Sustainability, Financial performance, Corporate sustainability reporting, ROA, ROE
Paper type Research paper
https://www.emerald.com/insight/content/doi/10.1108/JFRA-09-2023-0524/full/html
