The Role of Government Regulations in Enhancing Corporate Social Responsibility Disclosure and Firm Value

This research seeks to provide evidence about how political connections, proxied by government ownership and the existence of politically connected board members, affect the extent of corporate social responsibility (CSR) disclosures in Indonesian listed companies. This research uses the legitimacy theory as a basis for explaining management's motivation for disclosing its CSR. The sample consists of 131 firm-year observations from 38 non-financial public companies that published sustainability reports from 2013 to 2017. We measured the CSR disclosures using a disclosure checklist on the sustainability reports. We subsequently processed the data using a random effect (RE) linear regression. The result shows that CSR disclosures were greater in government-owned companies but lower in companies that have politically connected board members. The results support the legitimacy theory that the government intends to demonstrate legitimate national economic and political conditions by showing that government-owned companies are sustainable. However, CSR disclosures seem to have a substitutive relationship with the existence of politically connected board members, since those political connections may protect the company from public pressure and/or the risk of litigation, reducing the need for CSR disclosures. This research provides evidence that different types of political connections may have different impacts on corporate disclosures.

Section: Introductionmentioning

confidence: 99%

Political Connections and CSR Disclosures in Indonesia

Saraswati¹,

Sagitaputri²,

Rahadian³

2020

“…On the other hand, the existence of government regulation can increase disclosure, especially the various voluntary disclosure initiatives are unlikely to succeed if there is no pressure from the government in the form of binding regulations. The company seeks to comply with government regulations to maintain its viability and to build a good reputation in the community (Faisal et al, 2020). In line with previous studies, we formulate the following hypothesis: H1: The more rigorous state governance is, the higher the level of information transparency achieved.…”

Section: State Governance In Information Transparencymentioning

confidence: 78%

Determinants Influencing Information Transparency in Vietnamese Commercial Banks

Nguyễn¹,

Nguyen²,

Hoang³

et al. 2020

Information transparency ensures that market players all have the opportunity to access the same information to come up with their assessment of the banks' financial situation, performance and risks to reach effective investment decisions. This research is conducted to investigate the levels of impact of determinants on information transparency by examining the case studies of Vietnamese commercial banks. This study combines both qualitative and quantitative research methods, based on interviews of 32 specialists in banking, accounting and auditing fields, which were conducted to explore determinants influencing information transparency and to develop measurement scales. Then, a survey of 160 managers of commercial banks, audit firms, and accounting managers of firms who frequently had transactions with banks was carried out to investigate the statistical significance of these determinants. The results show that, out of seven determinants that have significant impacts on the banks' information transparency, commitment from banks' senior management regarding transparency in information disclosure has the highest impact, followed by state governance, auditing, information infrastructure, credit rating agencies, personnel and bank performance. Accordingly, we provide some recommendations for improving information transparency in the Vietnamese banking industry context as a case study and in emerging countries context in general.

“…The awareness of developed countries such as Japan and South Korea about sustainability is becoming higher because it is supported by the availability of resources such that it affects the increase in firm value. Overall, both developed and developing countries in Asia show an increase in firm value due to sustainability (Faisal et al, 2020;Laskar, 2018;Laskar & Maji, 2018). Conditions in Nigeria indicate the same thing, that better sustainability practices can improve firm performance (Dembo, 2017).…”

Section: H 2 : the Acgs Has A Positive Effect On Firm Valuementioning

confidence: 97%

ASEAN Corporate Governance Scorecard: Sustainability Reporting and Firm Value

Husnaini¹,

Basuki²

2020

This study aims to test empirically whether the ASEAN Corporate Governance Scorecard (ACGS) has a positive effect on Sustainability Reporting (SR) and whether the ACGS and Sustainability Reporting (SR) have a positive effect on Firm Value (FV). The study was conducted in five ASEAN countries -Indonesia, Malaysia, Singapore, Philippines, and Thailand from 2014 -2017. The research sample was collected from companies with the ACGS data and obtained with the help of 359 company observations. Hypothesis testing was performed using the Ordinary Least Square (OLS). The results of the study do not support all hypotheses. The ACGS has no effect on sustainability reporting. The ACGS has a significant negative effect on firm value, while sustainability reporting has a negative and insignificant effect on firm value. The ACGS and sustainability reporting are not good news for investors. This research's limitation is that companies rarely disclose the final value of the ACGS in their annual reports, so this research uses content analysis. The weakness of content analysis is the researchers' subjectivity so that the point of view between researchers is different. Besides, sustainability reporting for several ASEAN countries is voluntary, so not all companies can be sampled, which ultimately affects interpretation.