Bank ownership structure and reputation through sustainability reporting in Indonesia

Abstract

Purpose This paper aims to find empirical evidence of bank ownership structures on bank reputation through the mediating role of sustainability reporting (SR) in Indonesian banking sector. Design/methodology/approach This paper uses purposive sampling to obtain 279 observations from 43 listed banks in Indonesia Stock Exchange during 2012–2018. This study uses structure equation modelling analysis in the AMOS software and intervening test from the Sobel test to investigate the direct and indirect effect in this research model. Findings The empirical results evidence: foreign, government and public ownership exhibit significant positive effect on SR but not with family ownership; SR positively affects bank reputation; SR appears as a mediator in which foreign, government and public ownership have a positive effect on the bank reputation through the indirect effect of SR while family ownership exhibits insignificant result. Practical implications The practical contribution of this study is that SR is proven to increase bank reputation through the legitimation from the public, so the management must properly pay attention by publishing this report. Originality/value This study provides several novelties to the literature: SR is used as a mediator in the relationships between bank ownership and reputation in which there is very limited studies investigating these aspects, especially in Indonesia. In addition, most SR studies in Indonesia still focus on SR determinants rather than its impact; customer deposits are used as a measurement basis of the bank reputation as it reflects better the trust and perception of the market so that it is relevant with the reputation level.

Determinants of sustainability reporting: A systematic literature review

“…Eight studies provide evidence that sustainability reporting is driven by government ownership. This relationship held valid in different contexts, such as Bangladesh (Saha, 2019), Indonesia (Sumarta et al, 2021), Lebanon (Alshbili et al, 2019), Italy (Fontana et al, 2015), India (Kumar et al, 2021). Only Garde Sánchez et al (2017) find no relationship between government ownership and sustainability reporting.…”

“…Nine studies investigate the role of foreign ownership as a determinant of sustainability reporting, yielding conflicting and mixed results. While some studies report a negative relationship between foreign investment and sustainability disclosures (Arena et al, 2020; Sharma et al, 2020), others find the opposite relationship (Amidjaya & Widagdo, 2020; Fahad & Nidheesh, 2020; Sumarta et al, 2021). Some studies even find no significant relationship (Ahmed et al, 2021; Chakroun et al, 2017; Matuszak & Różańska, 2020) between sustainability reporting and foreign shareholding.…”

“…While some studies report a positive relationship between family ownership and sustainability disclosure (Amidjaya & Widagdo, 2020;Habbash, 2016;Syed & Butt, 2017), others reveal a negative (Muttakin and Khan (2014) or a not significant relationship (Sumarta et al, 2021). Therefore, further research is recommended.…”

A roadmap for triggering the convergence of global ESG disclosure standards: lessons from the IFRS foundation and stakeholder engagement

“…It bears mentioning that providing better and superior disclosure on material issues is more important than providing solely more information. In the strictest sense, highlighting the quality of sustainability reporting is a crucial aspect to ensure credibility and reliability sustainable information (Xiao and Shailer, 2022), building corporate's reputation (Sumarta et al, 2021) qualitative characteristics of traditional accounting information. In the same vein, it is welldocumented that developing a uniform package of sustainability reporting standards must be strategically aligned with the qualitative characteristics of accounting information to generate high-quality information for vast stakeholders (EFAA, 2020).…”

“…It bears mentioning that providing better and superior disclosure on material issues is more important than providing solely more information. In the strictest sense, highlighting the quality of sustainability reporting is a crucial aspect to ensure credibility and reliability sustainable information (Xiao and Shailer, 2022), building corporate’s reputation (Sumarta et al , 2021) and enhance organization’s legitimacy (de Villiers et al , 2022). Therefore, sustainability information should be in alignment with qualitative requirements for information.…”