DOI: https://doi.org/10.14710/dijb.6.1.2023.24-35

The effect of ownership structure on social and environmental disclosure in Indonesia

1Doctoral Program of Economics Science, Sebelas Maret University, Indonesia

2Department of Accounting, Swadaya Gunung Jati University, Indonesia

3Department of Accounting, Sebelas Maret University, Indonesia

Open Access Copyright 2023 Diponegoro International Journal of Business under http://creativecommons.org/licenses/by-sa/4.0.

Citation Format:
Abstract

This study examines the effect of ownership structure with management ownership, foreign ownership, dispersed ownership and block ownership sub-variables on social and environmental disclosure. The Global Reporting Initiative (GRI) disclosure framework was adopted to extract social and environmental disclosures. The research method used is a quantitative method. The population in this study are manufacturing sector companies listed on the Stock Exchange Indonesia in 2018-2020. A total sample of 243 was obtained using a judgment sampling technique with a sample of 81 companies. The analytical method used in this research is multiple linear regression. The results of the analysis show that on average, social and environmental disclosure in manufacturing companies in Indonesia is still quite low. This research shows that there is an influence of management ownership, foreign ownership, and block ownership on social and environmental disclosure but not significant for dispersed ownership. The results of the analysis show that foreign ownership has a fairly strong positive influence on social and environmental disclosure. It was found that foreign ownership dominates the ownership structure by 97.59%, so that company managers must give more consideration to ownership structure, especially foreign ownership and international environmental standards to design good and effective social and environmental disclosure strategies. This study may be of interest to regulators as material for consideration in making investment policies, especially foreign investment regulations.

Fulltext View|Download
Keywords: ownership structure, social and environmental disclosure, effect ownership

Article Metrics:

Article Info
Section: Articles
Language : EN
Recent articles
Deaths and diseases: The impact of Covid-19 in Indonesian stock return Green credit and bank performance in Indonesia Financial literacy, network competency, market orientation and financial performance: A study from Bandung SMEs More recent articles
  1. Adel, Christine, Mostaq M. Hussain, Ehab K. Mohamed, and Ak Basuony (2019). “Is Corporate Governance Relevant to the Quality of Corporate Social Responsibility Disclosure in Large European Companies ?” International Journal of Accounting & Information Management
  2. Altuner, Dogan, Saban Celik, and Tuna Can Gulec (2015). “The Linkages among Intellectual Capital, Corporate Governance and Corporate Social Responsibility.” Corporate Governance (Bingley) 15(4):491–507. doi: 10.1108/CG-04-2014-0044
  3. Baba, Bello Usman, and Usman Aliyu Baba (2021). “The Effect of Ownership Structure on Social and Environmental Reporting in Nigeria: The Moderating Role of Intellectual Capital Disclosure.” Journal of Global Responsibility ahead-of-print(ahead-of-print). doi: 10.1108/jgr-06-2019-0060
  4. Barako, Dulacha G., Phil Hancock, and H. Y. Izan (2006). “Corporate Disclosure by Kenyan Companies.” Journal Compilation 14(2):107–25
  5. Bokpin, Godfred A., Zangina Isshaq, and Eunice Stella Nyarko (2014). “Corporate Disclosure and Foreign Share Ownership : Empirical Evidence from African Countries.” International Journal of Law and Management 57(5):417–44. doi: 10.1108/IJLMA-01-2014-0004
  6. Brammer, Stephen, and Stephen Pavelin (2006). “Voluntary Environmental Disclosures by Large UK Companies.” 33(October):1168–88. doi: 10.1111/j.1468-5957.2006.00598.x
  7. Camilleri, Mark Anthony (2017). “Corporate Sustainability and Responsibility: Creating Value for Business, Society and the Environment.” Asian Journal of Sustainability and Social Responsibility 2(1):59–74. doi: 10.1186/s41180-017-0016-5
  8. Chakroun, Raida, Hamadi Matoussi, and Sarra Mbirki (2017). “Determinants of CSR Disclosure of Tunisian Listed Banks : A Multi-Support Analysis.” Social Responsibility Journal. doi: 10.1108/SRJ-04-2016-0055
  9. Cormier, Denis, Marie-josée Ledoux, and Michel Magnan (2011). “The Informational Contribution of Social and Environmental Disclosures for Investors To Cite This Version : HAL Id : Hal-00481571 The Informational Contribution of Social and Environmental Disclosures for Investors.”
  10. Crisostomo, Vicente Lima, and Fatima de Souza Freire (2015). “The Influence of Ownership Concentration on Firm Resource Allocations to Employee Relations, External Social Actions, and Environmental Action.” Revista Brasileira de Gestao de Negocios 17(55):987–1006. doi: 10.7819/rbgn.v17i55.2026
  11. Dam, Lammertjan, and Bert Scholtens (2013). “Ownership Concentration and CSR Policy of European Multinational Enterprises.” Journal of Business Ethics 118(1):117–26. doi: 10.1007/s10551-012-1574-1
  12. Dias, António, Lúcia Lima Rodrigues, and Russell Craig (2017). “Corporate Governance Effects on Social Responsibility Disclosures.” Australasian Accounting, Business and Finance Journal 11(2):3–22. doi: 10.14453/aabfj.v11i2.2
  13. Diez, Jose LD, Roberto F. Gago, Laura C. Garcia, and Almudena M. Campillo (2014). “Determinantes de Las Practicas de RSC: Análisis de La Influencia de La Propiedad y Del Efecto Mediador de La Alta Direccion.” Revista Espanola de Financiacion y Contabilidad 43(1):47–68. doi: 10.1080/02102412.2014.890824
  14. Esa, Elinda, and Abdul Rahman Zahari (2016).“Corporate Social Responsibility: Ownership Structures, Board Characteristics & the Mediating Role of Board Compensation.” Procedia Economics and Finance 35 35(16):35–43. doi: 10.1016/S2212-5671(16)00007-1
  15. Ezhilarasi, G., and K. C. Kabra (2017). “The Impact of Corporate Governance Attributes on Environmental Disclosures : Evidence from India.” Indian Journal of Corporate Governance. doi: 10.1177/0974686217701464
  16. Fama, Eugene F., and Michael C. Jensen (1983). “Separation of Ownership and Control Separation of Ownership and Control.” Journal of Law and Economics 26(2):301–25
  17. Fauzi, Hasan, Goran Svensson, and Azhar Abdul Rahman (2010). “‘Triple Bottom Line’ as ‘Sustainable Corporate Performance’: A Proposition for the Future.” Sustainability 2(5):1345–60. doi: 10.3390/su2051345
  18. Fusco, Floriana, and Paolo Ricci (2019). “What Is the Stock of the Situation? A Bibliometric Analysis on Social and Environmental Accounting Research in Public Sector.” International Journal of Public Sector Management 32(1):21–41. doi: 10.1108/IJPSM-05-2017-0134
  19. Ghazali, Nazli A. Mohd, and Pauline Weetman (2006). “Perpetuating Traditional Influences : Voluntary Disclosure in Malaysia Following the Economic Crisis.” Journal of International Accounting, Auditing and Taxation 15:226–48. doi: 10.1016/j.intaccaudtax.2006.08.001
  20. Giuliani, Elisa (2016). “Human Rights and Corporate Social Responsibility in Developing Countries’ Industrial Clusters.” Journal of Business Ethics 133(1):39–54. doi: 10.1007/s10551-014-2375-5
  21. Haniffa, R. M., and T. E. Cooke (2005). “The Impact of Culture and Governance on Corporate Social Reporting.” Journal of Accounting and Public Policy 24:391–430. doi: 10.1016/j.jaccpubpol.2005.06.001
  22. Hsieh, Chin Hsien, Irene Wei Kiong Ting, Jawad Asif, and Hanh Thi My Le (2020). “The Role of Controlling Shareholders in Determining Investments of Intellectual Capital among Taiwanese Semiconductor Companies.” Journal of Intellectual Capital 21(1):62–86. doi: 10.1108/JIC-05-2019-0091
  23. Hu, Yuan Yuan, Yanhui Zhu, Jon Tucker, and Yuxiao Hu (2018). “Ownership Influence and CSR Disclosure in China.” Accounting Research Journal 31(1):8–21. doi: 10.1108/ARJ-01-2017-0011
  24. Huafang, Xiao, and Yuan Jianguo (2007). “Ownership Structure , Board Composition and Corporate Voluntary Disclosure Evidence from Listed Companies in China.” Managerial Auditing Journal. doi: 10.1108/02686900710759406
  25. Ismail, Abdullah Hamoud, Azhar Abdul Rahman, and Abdulqawi Ahmed Hezabr (2018). “Determinants of Corporate Environmental Disclosure Quality of Oil and Gas Industry in Developing Countries.” International Journal of Ethics and Systems. doi: 10.1108/IJOES-03-2018-0042
  26. Jensen, Michael C., and William H. Meckling (1976). “Theory of The Firm: Manager Behavior, Agency Cost and Ownership Structure.” Financial Economics. doi: 10.1177/0018726718812602
  27. Khan, Arifur, and Mohammad Badrul Muttakin (2012). “Corporate Governance and Corporate Social Responsibility Disclosures : Evidence from an Emerging Economy Corporate Governance and Corporate Social Responsibility Disclosures : Evidence from an Emerging Economy.” Jurnal of Business Ethics (May). doi: 10.2139/ssrn.2050630
  28. Kuzey, C., M. Kilic, and A. Uyar (2015). “The Impact of Ownership and Board Structure on Corporate Social Responsibility (CSR) Reporting in the Turkish Banking Industry The Relationship between Governance Indicators and Tax Evasion in the EU View Project Earnings Management View Project Merve Kıl.” Corporate Governance International Journal of Business in Society
  29. Lamb, Nai H., and Frank C. Butler (2018). “The Influence of Family Firms and Institutional Owners on Corporate Social Responsibility Performance.” Business and Society 57(7):1374–1406. doi: 10.1177/0007650316648443
  30. Li, Xiaojun, and Christina Gai Wai Chan (2016). “Who Pollutes? Ownership Type and Environmental Performance of Chinese Firms.” Journal of Contemporary China 25(98):248–63. doi: 10.1080/10670564.2015.1075718
  31. Ling, Tay Chia, and Nigar Sultana (2015). “Corporate Social Responsibility : What Motivates Management to Disclose ?” Social Responsibility Journal. doi: 10.1108/SRJ-09-2013-0107
  32. Lu, Yingjun, Indra Abeysekera, and Corinne Cortese (2015). “Corporate Social Responsibility Reporting Quality, Breed Characteristics and Corporate Social Reputation.” Pacific Accounting Review 27(1):95–118
  33. Majumder, Tofael Hossain, Aklima Akter, and Xiaojing Li (2017). “Corporate Governance and Corporate Social Disclosures : A Meta-Analytical Review Abstract.” International Journal of Accounting & Information Management
  34. Masud, Abdul Kaium, Mohammad Nurunnabi, and Seong Mi Bae (2018). “The Effects of Corporate Governance on Environmental Sustainability Reporting : Empirical Evidence from South Asian Countries.” Asian Journal of Sustainability and Social Responsibility
  35. Milne, Markus J., and Rob Gray (2013). “W(h)Ither Ecology? The Triple Bottom Line, the Global Reporting Initiative, and Corporate Sustainability Reporting.” Journal of Business Ethics 118(1):13–29. doi: 10.1007/s10551-012-1543-8
  36. Muttakin, Mohammad Badrul, and Nava Subramaniam (2015). “Firm Ownership and Board Characteristics Do They Matter for Corporate Social Responsibility Disclosure of Indian Companies ?”
  37. Nurhayati, Ratna, Grantley Taylor, Rusmin Rusmin, Greg Tower, and Bikram Chatterjee (2016). “Factors Determining Social and Environmental Reporting by Indian Textile and Apparel Firms: A Test of Legitimacy Theory.” Social Responsibility Journa 12(1):1–5
  38. Obembe, Olfemi B., and Rosemary O. Soetan (2015). “Competition, Corporate Governance and Corporate Performance Substitutes or Complements? Empirical Evidence from Nigeria Olufemi.” Economic and Management Studie
  39. Otchere, Francis Aboagye, Ibrahim Bedi, and Teddy Ossei Kwakye (2013). “Corporate Governance and Disclosure Practices of Ghanaian Listed Companies.” Journal of Accounting in Emerging Economies. doi: 10.1108/20421161211229817
  40. Paek, Soyon, Qu Xiao, Seoki Lee, and Haiyan Song (2013). “Does Managerial Ownership Affect Different Corporate Social Responsibility Dimensions ? An Empirical Examination of U . S . Publicly Traded Hospitality Firms.” International Journal of Hospitality Management 34:423–33
  41. Peng, Mike W., and Yi Jiang (2010). “Institutions Behind Family Ownership and Control in Large Firm.” Journal OfManagement Studies (March). doi: 10.1111/j.1467-6486.2009.00890.x
  42. Platonova, E., M. Asutay, R. Dixon (2018). “The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector.” Journal of Business Ethics
  43. La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and R. Vishny (1999). “Corporate Governance around the World.” Journal of Finance 54(2):471–517
  44. Rashid, Afzalur (2015). “The Influence of Stakeholder Power on Corporate Social Responsibility: Evidence from a Relationship-Based Economy.” Social Responsibility Journal 11(2):270–89. doi: 10.1108/SRJ-09-2013-0109
  45. Reverte, C (2009). “Determinants of Corporate Social Responsibility Disclosure Ratings by Spanish Listed Firms.” Journal of Business Ethics. doi: 10.1007/s10551-008-9968-9
  46. Saheli, Mahdi, Hossein Tarighi, and Malihe Rezanezhad (2017). “The Relationship between Board of Directors ’ Structure and Company Ownership with Corporate Social Responsibility Disclosure Iranian Angle.” Humanomics. doi: 10.1108/H-02-2017-0022
  47. Scaltrito, Davide (2016). “Voluntary Disclosure in Italy: Firm-Specific Determinants an Empirical Analysis of Italian Listed Companies.” EuroMed Journal of Business 11(2):272–303. doi: 10.1108/EMJB-07-2015-0032
  48. Schaltegger, Stefan, Jacob Horisch, and R. Edward Freeman (2019). “Business Cases for Sustainability: A Stakeholder Theory Perspective.” Organization and Environment 32(3):191–212. doi: 10.1177/1086026617722882
  49. Sellami, Yosra, Nada Dammak Ben Hlima, and Anis Jarboui (2019). “An Empirical Investigation of Determinants of Sustainability Report Assurance in France.” Journal of Financial Reporting and Accounting 17(2):320–42. doi: 10.1108/JFRA-02-2018-0019
  50. Stuebs, Marty, and Li Sun (2015). “Corporate Governance and Social Responsibility.” International Journal of Law and Management. doi: 10.1108/IJLMA-04-2014-0034
  51. Sufian, Mohammad Abu, and Muslima Zahan (2013). “Ownership Structure and Corporate Social Responsibility Disclosure in Bangladesh.” International Journal of Economics and Financial Issues 3(4):901–9
  52. White, Katherine, Rishad Habib, and David J. Hardisty (2019). “How to SHIFT Consumer Behaviors to Be More Sustainable: A Literature Review and Guiding Framework.” Journal of Marketing 83(3):22–49. doi: 10.1177/002224291982564

Last update:

No citation recorded.

Last update:

No citation recorded.