Sustainability Reporting Disclosure in Islamic Corporates: Do Human Governance, Corporate Governance, and IT Usage Matter?

Abstract

In developing countries, particularly South Asia, there is scarce research on corporate governance and sustainability reporting disclosure. This study considers several insightful theories, including Stakeholder Theory, Agency Theory, and the TOE Framework, to understand the relationships and drivers of sustainability reporting. The study examines Indonesian Islamic corporates using data from the ISSI (Indonesia Shariah Stock Index). We gathered annual reports and sustainability reports from the ISSI database for the year 2019. The study investigates how human governance (HG), Islamic corporate governance (ICG), and information technology usage (ITU) are related to sustainability reporting disclosure (SR). The findings showed that the sustainability reporting disclosure was significantly influenced by human governance and Islamic corporate governance with firm size and leverage. Furthermore, the research showed that profitability was not significantly related to sustainability reporting disclosure, that Islamic corporate governance had a significant negative influence on SR, and that IT usage was only significant when human governance was not present. Finally, the results showed that human governance is the main driver of sustainability reporting disclosure. Therefore, we conclude that human governance is the best predictor for sustainability reporting disclosure.

The Relationship between Islamic Corporate Governance, Human Governance, Usage of Information Technology and Sustainability Reporting: Comparison of Shariah Compliant Companies in Malaysia and Indonesia

“…In Indonesia, there are few studies regarding Syariah companies, and lesser related to SR disclosure since mandatory SR began in the year 2020 for all listed Indonesian companies, including Syariah companies. This research, however, extends the previous paper on sustainability reporting disclosure conducted in Indonesia which concluded that human governance and Islamic corporate governance significantly influence sustainability reporting disclosure and human governance has the biggest beta coefficient towards sustainability reporting disclosure compared to corporate governance and IT usage (So et al, 2021).…”

Analysis of Corporate Governance and Corporate Sustainability Performance in the Indonesian Context

“…This approach claims that the decision to invest in environmental, social and governance activities is viewed as the manifestation of the managerial agency issues in the firms (Castillo-Merino & Rodríguez-Pérez, 2021;Ferrell et al, 2016). On the contrary, in the modern business upholding the sustainable concept, managers are demanded not only to maximize the wealth of the stakeholders through the economic aspect but also to resolve the social and environmental issues (So et al, 2021;Masud et al, 2018;Kouaib et al, 2021;Farooq et al, 2021;Kend, 2015). In the Indonesian context, the government started to regulate the implementation of social and environmental responsibilities through the Laws on Limited Companies in 2007 (Tjahjadi et al, 2021).…”

The Fulfillment of Religious Education Services for Wong Sikep Samin in Kudus Central Java: A Study From Human Governance Perspectives

“…Human governance is an approach that strives for government or public administration to have "humane" values. So et al (2021) stated human governance is about how governance can guide citizen behaviour through internal, inside-out, and value-based conviction. This act should also consider the axiology within society, including values, beliefs, systems, religion, culture, and ethics .…”