Factors influencing corporate sustainability disclosure practices: empirical evidence from Indian National Stock Exchange

Abstract

Purpose This study aims to evaluate the nature and extent of sustainability disclosure practices of publicly listed companies in India. Further, it investigates the impact of potential determinants on the sustainability disclosure of companies. Design/methodology/approach The study analyzes data of 75 top listed nonbanking companies operating in India included in NIFTY100 Index for the years 2014-2015 to 2018-2019. In the present study, environment, social and governance disclosure dimensions were considered to evaluate the sustainability reporting performance of companies using content analysis. Panel data analysis was conducted to investigate the impact of various factors on the extent of sustainability information disclosure. Findings Results indicate that environmentally polluting industries disclose significantly higher sustainability information than non-polluting industries in India. The empirical findings suggest that determinants such as company size, age, free cash flow capacity, government ownership and global reporting initiative (GRI) usage positively related to the extent of corporate sustainability disclosure. Contrary to the expectations, financial leverage and profitability were found to be negatively related to the sustainability disclosure of companies in India. Practical implications This study provides empirical evidence for regulators, practitioners and corporate strategists to assess the progress in the sustainability reporting landscape in India. The finding implies that large and established companies can reduce legitimacy costs through higher sustainability information disclosure. Interestingly, this premise did not hold in the case of high leveraged and profitable companies. Overall findings can also help policymakers to incorporate necessary reforms to improve sustainability reporting in India. Originality/value This study is one of the first studies to investigate the nature, extent and potential determinants of corporate sustainability disclosure in India. The paper adds to the existing literature on sustainability reporting by providing empirical evidence on the relationship between sustainability reporting and potential determinants such as government ownership, size, leverage, profitability, age, free cash flow capacity, industry and GRI usage.

Do ownership structures and governance attributes matter for corporate sustainability reporting? An examination in the Indian context

“…, 2019). Sustainability reporting domain is still in the formative stage in developing country like India (Kumar et al. , 2021), and only few studies have examined the sustainability reporting practices of companies operating in India (Kumar and Prakash, 2020).…”

“…The review of extant literature suggests that, although prior studies have empirically examined the link between corporate governance and sustainability reporting in the context of developed countries (Jizi et al, 2014;Figueira et al, 2018;Garcia et al, 2019), the studies exploring the same based on developing countries are limited (Mahmood and Orazalin, 2017;Alshbili et al, 2019). Sustainability reporting domain is still in the formative stage in developing country like India (Kumar et al, 2021), and only few studies have examined the sustainability reporting practices of companies operating in India (Kumar and Prakash, 2020). Moreover, a study providing empirical evidence about the impact of governance attributes on sustainability reporting of companies operating in India is nonexistent, to the best of authors' knowledge.…”

Sustainability performance disclosures: the impact of gender diversity and intellectual capital on GRI standards compliance in Uganda

“…Injeni et al, 2021;Tilt et al, 2021;Jain et al, 2021), while others use other measures of SPD such as disclosure indices obtained from other studies and reporting frameworks (e.g. Khan et al, 2021;Cicchiello et al, 2021;Kumar et al, 2021). We also note that majority of the studies use content analysis methodologies (e.g.…”

Impact of Corporate Attributes on Sustainability (ESG) Reporting: Evidence from Listed Banks in India

“…As per legitimacy theory older firms are likely to disclose much more information on CSR/ sustainability in their reports to legitimise their existence in the society [34][35][36] . Most of the researchers found a positive relationship between firm age and the level of CSR and sustainability reporting [18][19][20][21]35 . Very few studies have found insignificant or negative association between age and level of corporate disclosure 10,12,16 .…”