Bridging the Gap between Sustainability Disclosure and Firm Performance in Indonesian Firms: The Moderating Effect of the Family Firm

Abstract

This study investigates the impact of sustainability reporting on firm performance. This paper also examines the moderating effect of family ownership on the relationship between sustainability disclosure and firm performance. The research sample consists of 850 primary and secondary sector companies listed on the Indonesian stock exchange between 2014 and 2020. This study generates its results using a panel model with Generalized Least Square (GLS) regression. This study concludes that sustainability disclosure has a positive impact on the financial performance of market- and accounting-based companies. Additionally, family businesses strengthen the link between sustainability disclosure and firm performance. The findings of this paper provide unique and useful information for company stakeholders and managers seeking to improve sustainability disclosure for optimal performance. In addition, it can be advantageous for the policymaker to establish the policy. This study contributes to the literature by providing comprehensive examination of the relationship between sustainability disclosure and company performance.

Riqueza socioemocional en la implementación de Objetivos de Desarrollo Sostenible en empresas familiares

“…La empresa familiar que relaciona sus actividades con los problemas sociales, económicos y medioambientales se suma al desarrollo sostenible (Zarefar et al, 2022). Los Objetivos de Desarrollo Sostenible ODS brindan una visión hacia el 2030, donde el sector privado tiene la oportunidad única de utilizar los ODS como un marco para mejorar su compromiso con la RSC (Schönherr et al, 2017).…”

Bridging Stakeholders’ Expectations Gap: The Role of Sustainability Reporting of Listed Firms in Nigeria

“…Sustainability reporting places a huge responsibility on companies due to the intricacies of managing the diverse stakeholders who require almost a boundless array of information that are often contradictory to make decision (Maama, 2020). Thus, one of the major sustainability reporting challenges confronting business organizations is determining the content of the report, selecting and measuring material information to be included in the report due to lack of specific procedure of determining material issues (Hsu et al, 2013;Machado et al, 2020), since the relevance of the reports rest on the ability of the report to address stakeholders material needs (Vasileva, 2021). Materiality as a fundamental concept determines the importance of items to be included in financial reports and accounts (Edgley, 2014), the clarity of financial reports can be reduced with the disclosure of irrelevant information, as it might obfuscate the understandability of material information, given the fact that the perception of materiality may differ among the multiple group of stakeholders (AccountAbility, 2015;Amel-Zadeh & Serafeim, 2018;Torelli et al, 2020).…”

Analysis of Corporate Governance and Corporate Sustainability Performance in the Indonesian Context

“…The issue has become crucial to discuss since the number of environmental damage, unethical behaviors of the companies, exploitation of child labor, as well as the economic, social, and other environmental issues increased (Ludwig & Sassen, 2022). Corporate sustainability is a corporate concept where the companies attempt to maintain the economy, social and environmental welfare to create sustainable effects in the long term (Formentini & Taticchi, 2016;Nawawi et al, 2020;Tjahjadi et al, 2021;Zarefar et al, 2022). Moreover, the countries that joined the United Nations (UN) have agreed to implement the Corporate Sustainability CSP Progress Report 2020", the Asia-Pacific region indicates bad performance in implementing corporate sustainability.…”