Corporate integrity, external assurance and sustainability reporting quality: evidence from the Malaysian public listed companies

Abstract

PurposeThis paper aims to examine the effect of corporate integrity and external assurance on Sustainability Reporting Quality (SRQ) of Malaysian public listed companies.Design/methodology/approachThe study uses a longitudinal sample of 2,463 firm-year observations of non-financial firms listed on the main board of Bursa Malaysia from 2015 to 2019. The study employed panel regression that is, Fixed Effect (FE) Robust Standard Error estimation technique to test its hypotheses.FindingsThe panel regression results reveal that corporate integrity and external assurance positively and significantly influence the quality of sustainability reporting. Though the positive association shows an improvement in the SRQ of the sampled firms, it needs an improvement as the disclosure is more general and qualitative than quantitative. The present improvement in SRQ might result from some regulatory changes like the Sustainability Practice Note 9 Updates of Bursa Malaysia 2017 and the Revised MCCG Principle A to C within the same period.Research limitations/implicationsThe study adopts a purely quantitative approach and call for a qualitative investigation in the area in the future.Practical implicationsThe study has policy implication for the government and regulators to strengthen compliance with the sustainability reporting guide and the Practice Note 9 Updates. It also has implication for corporate integrity and external assurance for companies, to enhance SRQ and achieve sustainable development.Originality/valueThe study bridged literature gaps by offering new insights and empirical evidence on the role of corporate integrity in SRQ, which has received no empirical attention in the Malaysian context.

Corporate Integrity and Information Asymmetry: Evidence from Iran.

“…Strategic influence encompasses the company's interactive functions with stakeholders in a timely and reliable transfer of news and information. This reduces the information asymmetry and creates trust and confidence in them (Elaigwu et al, 2022). By confirming this point, Garrett et al (2014) stated that increasing corporate integrity would result in further content conformity between the strategies and performances of the company concerning information sharing, and this can reduce information asymmetry through the quality of financial reporting.…”

Corporate Sustainability Reporting and Stakeholders’ Interests: Evidence from China

“…The study of SR in emerging markets is a growing area of research. This is largely due to the unique challenges and opportunities presented by these markets that differ from those in more mature economies [33][34][35][36].…”

Post-Issue of Sustainability Report: Does Market Valuation Improve?

“…Sustainability reporting is a form of information disclosure that illustrates firm's contribution to sustainability through economic, environmental, social activities (Elaigwu et al, 2022). Firms nowadays are aware of the commercial benefits of increased accountability (Sreepriya et al, 2022) and thus engage more in sustainability reporting (Aras and Crowther, 2009) thanks to the increasing need for transparency on economic, environmental, and social issues throughout the world (Buallay, 2019).…”

“…Firms nowadays are aware of the commercial benefits of increased accountability (Sreepriya et al, 2022) and thus engage more in sustainability reporting (Aras and Crowther, 2009) thanks to the increasing need for transparency on economic, environmental, and social issues throughout the world (Buallay, 2019). Prior studies have suggested to invest in sustainability reporting as a strategy (Ching and Gerab, 2017;Elaigwu et al, 2022) as it has been evidenced to able to create legitimacy and trust (Ching and Gerab, 2017;Shamil et al, 2014) that further deliver positive values to its reporting entity (Berthelot et al, 2012). Thus, firms can earn benefit from sustainability reporting practice to improve their image (Titisari et al, 2019).…”

“…Good firm reputation is required so that the firm gain legitimacy to operate (Elaigwu et al, 2022). It is also a crucial consideration for investors in the capital market (Fernández-Gámez et al, 2016;Misiuda and Lachmann, 2022).…”