Quality of voluntary modern slavery disclosures: top Australian listed companies

Abstract

Purpose There is a growing concern over the need for greater transparency of quality information by companies about modern slavery to contribute toward elimination of the practice. Hence, this paper aims to examine factors behind the quality of voluntary modern slavery disclosures and major sources of pressure on Australian company disclosures in a premodern slavery legislated environment. Design/methodology/approach Content analysis and cross- sectional regression modeling are conducted to analyze factors determining the quality of voluntary modern slavery disclosures of the top 100 firms listed on the Australian Stock Exchange and their implications for institutional pressures. Findings Results indicate that size, assurance by Big-4 firms and publication of stand-alone modern slavery statements are significant drivers of disclosure quality in the sample. Profitability, listing status and the degree of internationalization are found to be unrelated to the quality of voluntary modern slavery disclosures. Industry classification is significant but only partly supports the prediction, and further investigation is recommended. Practical implications This paper provides a foundation for regulators and companies toward improving the quality of their modern slavery risk disclosures with a particular focus on prior experience, assurance and size. In practice, contrary to suggestions in the literature, results indicate that monetary penalties are unlikely to be an effective means for improving the quality of modern slavery disclosure. Results of the study provide evidence of poor quality of disclosures and the need for improvement, prior to introduction of modern slavery legislation in Australia in 2018. It also confirms that regulation to improve transparency, through the required publication of a modern slavery statement, is significant but not enough on its own to increase disclosure quality. Originality/value To the best of the authors’ knowledge, this is the first research examining company level factors with an impact on voluntary modern slavery disclosure quality and the links to institutional pressures, prior to the introduction of the Commonwealth Modern Slavery Act 2018.

Covid-19 disclosure: do internal corporate governance and audit quality matter?

“…The literature shows that the presence of Big-4 audit firms enhances disclosure levels (Albitar et al , 2021; Wuttichindanon and Issarawornrawanich, 2020; Morris and Tronnes, 2018; Rao et al , 2022; Hassan et al , 2020). However, other literature shows a negative relationship (Habbash et al , 2016) or no relationship (Aljifri and Hussainey, 2007; Aly et al , 2010; El-Halaby and Hussainey, 2016).…”

Social visibility and substance in corporate social sustainability disclosures

“…Stevenson and Cole, 2018;Flynn and Walker, 2021;Geng et al, 2022), the qualitative vs. quantitative disclosure of certain themes (e.g. Christ et al, 2019;Rao et al, 2022), their compliance with the Modern Slavery Act (Voss et al, 2019;Monciardini et al, 2019) and with statutory and voluntary norms (Pinnington et al, in press), the use of metaphors in MSS (Ras and Gregoriou, 2019), and an in-depth analysis of the development of one company's MSS over time (New and Hsin, 2021). Most of these studies focus on quality aspects of MSS, yet do not take into account the concreteness of the actions reported, which we conceptualize as substance.…”

“…PwC, 2021). For instance, Rao et al (2022) found evidence that firm size and the assistance of Big-4 audit firms are drivers of the number of different themes addressed in social disclosures, such as MSS, while companies' listing status was unrelated to this. However, Du et al (2017) argue that the newness of the information about companies' non-financial performance in such disclosures is what the stock market pays attention to and integrates into its stock valuation.…”

“…Although we consider reporting behavior over a number of years -unlike e.g. Rao et al (2022) -another limitation we faced in this regard was the limited number of years for which modern slavery statements are available and the disruption of supply chains due to the COVID-19 pandemic, which would have made additional data collection futile. However, despite the limited number of years in our panel data, significant relationships were found, which still suggests that we can assume some influence of social visibility on substantive content over time.…”

“…Further, Valor and Zasuwa (2017) studied the quality of corporate philanthropy reports, based on assessments of how comprehensively different issues were addressed in such reports. Recently, Rao et al. (2022) investigated if institutional pressures are related to the quality of modern slavery statements in Australia, but found only partial evidence for some of the isomorphic forces, thus calling for further investigations.…”