Stakeholder Power And Sustainability Disclosure: Stakeholder Salience Perspective

Abstract

Research Aims: This study tests the effects of different stakeholder power (shareholders, employees, customers, business partners, community, government, NGOs, and media) on sustainability disclosure using stakeholder salience theory. Extending from this perspective, this study makes separate assumptions for each stakeholder and determines which one had the most power over sustainability disclosure. Design/Methodology/Approach: The study adopts a journalism (i.e., news framing) approach and observes the element of power in sustainability disclosure using content analysis. The sample comprises of panel data of 140 listed firms in the construction and property sector in Malaysia. Research Findings: The results show that the employees, community and media power are positively related to sustainability disclosure. This study improves our understanding of the factors determining firms' disclosure by demonstrating that market stakeholders (shareholders, employees, customers and business partners) are not perceived as necessary by managers concerning sustainability disclosure. Theoretical Contribution/Originality: Common studies view all stakeholders to be taken homogenously into consideration in business decision making. Few studies focus on the power of stakeholders in influencing disclosure is lacking. Managerial Implication in the South East Asian Context: This study gives insight on which stakeholder is the most important in rank and the finding informs managers to draft a stakeholder management plan and budget, given that such activities can increase firm value. Research Limitation & Implications: This research however did not investigate the dynamics of stakeholder power along with the existence of other salience factors, i.e., the legitimacy and urgency factors. Keywords: Construction, Stakeholder, Power, Salience Theory, Sustainability Disclosure

Corporate ethical values disclosure: evidence from Malaysian and Indonesian top companies

“…This is because different stakeholders have different areas of concern. Thus, managers would have to react based on the stakeholders’ power (Majid et al , 2023). Shareholders’ power indicated by activism in firms is comparatively low (compared with that in developed countries).…”

“…Another possible reason for the lower disclosure of ethical values information by Malaysian companies is due to conformance to specific industry requirements. According to Majid et al (2023), the construction and property companies received great attention from the media due to the environmental impacts caused by these sectors. In addition, the media or online news is also a source of coercive pressure that influences the level of reporting practices, for example, accountability practices (Abang Ahmad et al , 2022; Cahaya et al , 2016).…”