The role of foreign board and ownership on the quality of sustainability disclosure: the moderating effect of social reputation

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Abstract

Purpose: This study aims to examine the effect of social reputation on the relationship between boards and foreign ownership on the quality of sustainability disclosure. Design/methodology/approach: The sample of this study consists of publicly-traded primary and secondary sector companies in Indonesia for 12 years, from 2009 to 2020. This study uses panel model regression to generate its results. The disclosure data are hand-collected data sourced from annual financial and company sustainability reports. Findings: Higher foreign board component companies report lower quality of sustainability disclosure, whereas companies that possess foreign ownership components report a higher quality of sustainability disclosure. This result is strengthened by obtaining consistent results tested with economic, social and environmental disclosure components. In addition, if the company has a good social reputation, it will strengthen the relationship of foreign ownership to the quality of sustainability disclosure. Practical implications: These findings are relevant for policymakers, professional organizations and practitioners in Indonesia and other developing countries. Originality/value: The moderating effect of social reputation on the relation of the foreign board and foreign ownership-quality of sustainability disclosure as this study does remain rare in developing countries. This study complements various research conducted in developing countries, such as Indonesia, by offering a new dimension. The results indicate that social reputation has a moderating role in determining the impact of foreign ownership on the quality of sustainability disclosure.

Original languageEnglish
JournalCorporate Governance (Bingley)
DOIs
Publication statusAccepted/In press - 2023

Keywords

  • Foreign board
  • Foreign investor
  • Social reputation
  • Sustainability disclosure quality

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