Determinants of Sustainability Disclosure: Empirical Evidence from Vietnam

Abstract

The paper investigates the effect of the factors on the disclosure of sustainable development information of enterprises. The research sample includes 120 manufacturing companies listed on Vietnam stock market in 2019. This research uses ordinary least squares (OLS) to address econometric issues and to improve the accuracy of the regression coefficients. The empirical results show that five variables have a statistically significant positive effect on disclosure of sustainable development information of manufacturing companies, including firm size (SIZE), independence of board of directors (BOD), foreign ownership (FRO), return on equity (ROE), and financial leverage (LEV). The results indicate that state ownership (STO) has a statistically significant negative effect on disclosure of sustainable development information of manufacturing companies listed on Vietnam stock market. Besides, the research results also show there is a large difference in the disclosure of sustainable development information between listed companies in Vietnam, those of other emerging economies in the region, and the companies in developed markets. Therefore, this paper provides a new insight to managers and related parties on how to improve the firm's sustainability disclosure to bring benefit for the firm itself and the stakeholders by reasonable decisions about the factors that affect disclosure of sustainable development information.

The Impact of Firm Size, Leverage, Firm Age, Media Visibility and Profitability on Sustainability Report Disclosure

“…Firm age indicates that firm age has a negative and significant impact on SR disclosure and these results are contrary to what Fahad & Nidheesh (2020) stated, that firm age has a psotive impact on SR. Media visibility indicates that media visibility has no impact on SR disclosure and this is contrary to what Gavana et al (2017) stated, that media visibility has an impact on SR disclosure. The last is the profitability variable indicates that firm's profitability has a significant impact on SR disclosure and is aligned with the research conducted by Ariyani & Hartomo (2018) and Nguyen & Nguyen (2020), who stated that profitability has a significant impact on SR disclosure.…”

“…Because SR can fulfill shareholders or investors and stakeholders in running firm operations that are more concerned with the environment for the firm's sustainability goals (Ariyani & Hartomo, 2018). In line with Ariyani & Hartomo's research (2018), research conducted by Nguyen & Nguyen (2020) also stated that leverage has a significant positive impact on SR, which means that SR can be used by a firm in obtaining debt from stakeholders.…”

“…Countries where their main source of corporate capital comes from third parties or creditors, thus firms with high financial leverage will tend to disclose more information to creditors, suppliers, and investors with the aim of creating greater confidence in creditors that the firm can meet its financial obligations and increase opportunities. Get a good investment from financial institutions (Nguyen & Nguyen, 2020). Leverage is used by firms to fund their operations.…”

“…If the firm discloses the SR, investors will see the good side of the firm and the public's view will also be good for the firm so that the firm will get higher profitability (Ariyani & Hartomo, 2018). Gunarsih et al (2020), stated that profitability has a negative impact on SR disclosure because the higher ROA, the lower the SR and ROA is detrimental to SR. On the other hand, research by Nguyen & Nguyen (2020) and Ariyani & Hartomo (2018) stated that profitability is one of the variables that have positive and significant influence on SR disclosure. METHOD, DATA, AND ANALYSIS This research uses an explanatory research with a quantitative approach and aims to analyze and examine the relation between firm size, leverage, firm age, media visibility and profitability on SR disclosure.…”

“…One of them is that large companies are becoming the center of attention among the public and government and have more financial resources to implement SR (Bhatia & Tuli, 2017). Research (Nguyen & Nguyen, 2020) also stated that there are important factors driving SR, such as firm size and leverage. While other driving factors for SR are firm age (Fahad & Nidheesh, 2020), profitability (Akbulut & Kaya, 2019) and media visibility (Yu & Liang, 2020).…”