Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 76 Download : 60

Downloads

Download data is not yet available.

Main Article Content

Abstract

Our study investigates the influence of board characteristics on ESG disclosure for companies listed on the Indonesia Stock Exchange listed  from to 2018-2022. This study analyzes independent board members, board size, gender diversity, and audit committee independence as determinants of ESG disclosure in Indonesia’s public companies. The data were derived from Thompson Reuters and multiple linear regression was used to test the effects. The results showed that gender diversity was the only factor that was not significant. Independent commissionaires and board size positively affect ESG disclosure. Meanwhile, audit committee independence negatively and significantly affects ESG disclosure. Although ESG disclosure practices are still uncommon in Indonesia, the importance of board characteristics can be determined based on the results.

Keywords

ESG disclosure board characteristics board size board independence gender diversity

Article Details

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

References

  1. Abd-Elmageed, M. H. (2021). Are Tax Avoidance, Corporate Social Responsibility and Financial Performance Affecting Firm Value in the Egyptian Listed Companies?, 25(1) الفكر المحاسبي. https://doi.org/10.21608/atasu.2021.170161
  2. Alsayegh, M. F., Rahman, R. A., & Homayoun, S. (2020). Corporate Economic, Environmental, and Social Sustainability Performance Transformation Through ESG Disclosure. Sustainability, 12(9). https://doi.org/10.3390/su12093910
  3. Al-Shaer, H., & Zaman, M. (2018). Credibility of sustainability reports: The contribution of audit committees. Business Strategy and the Environment, 27(7), 973–986. https://doi.org/10.1002/bse.2046
  4. Arayssi, M., Jizi, M., & Tabaja, H. H. (2020). The impact of board composition on the level of ESG disclosures in GCC countries. Sustainability Accounting, Management and Policy Journal, 11(1), 137–161. https://doi.org/10.1108/SAMPJ-05-2018-0136
  5. Arif, M., Sajjad, A., Farooq, S., Abrar, M., & Joyo, A. S. (2020). The impact of audit committee attributes on the quality and quantity of environmental, social and governance (ESG) disclosures. Corporate Governance: The International Journal of Business in Society, 21(3). https://doi.org/10.1108/CG-06-2020-0243
  6. Baldini, M., Maso, L. D., Liberatore, G., Mazzi, F., & Terzani, S. (2018). Role of Country- and Firm-Level Determinants in Environmental, Social, and Governance Disclosure. Journal of Business Ethics, 150(1), 79–98. https://doi.org/10.1007/s10551-016-3139-1
  7. Bebbington, J., Unerman, J., & O’Dwyer, B. (2014). Sustainability reporting: Insight from institutional theory. In Sustainability accounting and accountability (pp. 273–285). Routledge.
  8. Bhatia, S., & Marwaha, D. (2022). The Influence of Board Factors and Gender Diversity on the ESG Disclosure Score: A Study on Indian Companies. Global Business Review,23(6). https://doi.org/10.1177/09721509221132067
  9. Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98-115. https://doi.org/10.1108/meq-12-2017-0149
  10. Chen, J. C., & Roberts, R. W. (2010). Toward a More Coherent Understanding of the Organization–Society Relationship: A Theoretical Consideration for Social and Environmental Accounting Research. Journal of Business Ethics, 97(4), 651–665. https://doi.org/10.1007/s10551-010-0531-0
  11. Cuadrado-Ballesteros, B., Martínez-Ferrero, J., & García-Sánchez, I. M. (2017). Mitigating information asymmetry through sustainability assurance: The role of accountants and levels of assurance. International Business Review, 26(6), 1141–1156. https://doi.org/10.1016/j.ibusrev.2017.04.009
  12. Cucari, N., Esposito De Falco, S., & Orlando, B. (2018). Diversity of Board of Directors and Environmental Social Governance: Evidence from Italian Listed Companies: Diversity of BoD and ESG: Evidence from Italian Listed Companies. Corporate Social Responsibility and Environmental Management, 25(3), 250–266. https://doi.org/10.1002/csr.1452
  13. Cucari, N., Esposito De Falco, S., & Orlando, B. (2018). Diversity of Board of Directors and Environmental Social Governance: Evidence from Italian Listed Companies. Corporate Social Responsibility and Environmental Management, 25(3), 250-266. doi:10.1002/csr.1452
  14. Deegan, C. (2014). Financial accounting theory (4th edition). McGraw-Hill Education Australia Pty Ltd.
  15. De Masi, S., Słomka-Gołębiowska, A., Becagli, C., & Paci, A. (2021). Toward sustainable corporate behavior: The effect of the critical mass of female directors on environmental, social, and governance disclosure. Business Strategy and the Environment, 30(4), 1865-1878. doi:10.1002/bse.2721
  16. Demers, E., Hendrikse, J., Joos, P., & Lev, B. (2021). ESG did not immunize stocks during the COVID-19 crisis, but investments in intangible assets did. Journal of Business Finance & Accounting, 48(3-4), 433-462. doi:10.1111/jbfa.12523
  17. Farooq, M. U., Kazim, I., Usman, M., & Latif, I. (2018). Corporate governance and audit fees: Evidence from a developing country. Pakistan Journal of Commerce and Social Sciences (PJCSS), 12(1), 94–110.
  18. Fulton, M., Kahn, B., & Sharples, C. (2012). Sustainable investing: Establishing long-term value and performance. Available at SSRN 2222740. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2222740
  19. Giannarakis, G. (2014). The determinants influencing the extent of CSR disclosure. International Journal of Law and Management, 56(5), 393–416. https://doi.org/10.1108/IJLMA-05-2013-0021
  20. Glass, C., Cook, A., & Ingersoll, A. R. (2016). Do Women Leaders Promote Sustainability? Analyzing the Effect of Corporate Governance Composition on Environmental Performance: Women Leaders. Business Strategy and the Environment, 25(7), 495–511. https://doi.org/10.1002/bse.1879
  21. Halid, S., Mahmud, R., Mohd Suffian, M. T., & Abdul Rahman, R. (2022). Does Firm's Board Affects ESG? Malaysian Evidence. International Journal of Academic Research in Accounting, Finance and Management Sciences, 12(1). doi:10.6007/ijarafms/v12-i1/11609
  22. Yawika, M. K., & Handayani, S. (2019). The Effect of ESG Performance on Economic Performance in the High Profile Industry in Indonesia. JOURNAL OF INTERNATIONAL BUSINESS AND ECONOMICS, 7(2). doi:10.15640/jibe.v7n2a12
  23. Harjoto, M. A., & Wang, Y. (2020). Board of directors network centrality and environmental, social and governance (ESG) performance. Corporate Governance: The International Journal of Business in Society, 20(6), 965-985. doi:10.1108/cg-10-2019-0306
  24. Harymawan, I., Nasih, M., Agustia, D., Putra, F. K. G., & Djajadikerta, H. G. (2022). Investment Efficiency and Environmental, Social, and Governance Reporting: Perspective From Corporate Integration Management. Corporate Social Responsibility and Environmental Management. https://doi.org/10.1002/csr.2263
  25. Husted, B. W., & Sousa-Filho, J. M. de. (2019). Board structure and environmental, social, and governance disclosure in Latin America. Journal of Business Research, 102, 220-227. doi:10.1016/j.jbusres.2018.01.017
  26. Jain, M., Sharma, G. D., & Srivastava, M. (2019). Can Sustainable Investment Yield Better Financial Returns: A Comparative Study of ESG Indices and MSCI Indices. Risks, 7(1), 15. doi:10.3390/risks7010015
  27. Jizi, M. (2017). The Influence of Board Composition on Sustainable Development Disclosure. Business Strategy and the Environment, 26(5), 640–655. https://doi.org/10.1002/bse.1943
  28. Jizi, M. I., Salama, A., Dixon, R., & Stratling, R. (2014). Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector. Journal of Business Ethics, 125(4), 601–615. https://doi.org/10.1007/s10551-013-1929-2
  29. Kamaludin, K., Ibrahim, I., Sundarasen, S., & Faizal, O. (2022). ESG in the boardroom: evidence from the Malaysian market. International Journal of Corporate Social Responsibility, 7(1). doi:10.1186/s40991-022-00072-2
  30. Kao, M.-F., Jian, C.-H., & Tseng, C.-H. (2024). Managerial ability and voluntary ESG disclosure and assurance: evidence from Taiwan. Sustainability Accounting, Management and Policy Journal, 15(1), 207-231. doi:10.1108/sampj-08-2022-0428
  31. Kotsantonis, S., Pinney, C., & Serafeim, G. (2016). ESG Integration in Investment Management: Myths and Realities. Journal of Applied Corporate Finance, 28(2), 10–16. https://doi.org/10.1111/jacf.12169
  32. Kumawat, R., & Patel, N. (2022). Are ESG Disclosures Value Relevant? A Panel-Corrected Standard Error (PCSE) Approach. Global Business Review, 23(6), 1558-1573. doi:10.1177/09721509221128637
  33. Lagasio, V., & Cucari, N. (2019). Corporate governance and environmental social governance disclosure: A meta-analytical review. Corporate Social Responsibility and Environmental Management, 26(4), 701–711. https://doi.org/10.1002/csr.1716
  34. La Torre, M., Mango, F., Cafaro, A., & Leo, S. (2020). Does the ESG Index Affect Stock Return? Evidence from the Eurostoxx50. Sustainability, 12(16), 6387. doi:10.3390/su12166387
  35. Lee, N., Heryana, Z. A.-B., & Hendriyeni, N. S. (2023). Do Women on Board, Institutional Ownership, and Governance Committee Relate to Environmental, Social, Governance (ESG) Disclosure? Proceedings of the 4th Asia Pacific Management Research Conference (APMRC 2022), 150-165. doi:10.2991/978-94-6463-076-3_11
  36. Leung, S., Richardson, G., & Jaggi, B. (2014). Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms. Journal of Contemporary Accounting & Economics, 10(1), 16-31. doi:10.1016/j.jcae.2013.11.002
  37. Lin, X., Zhang, D., & Li, Y. (2016). Delineating the dimensions of social support on social networking sites and their effects: A comparative model. Computers in Human Behavior, 58, 421–430. https://doi.org/10.1016/j.chb.2016.01.017
  38. Lokuwaduge, C. S. D. S., & Heenetigala, K. (2017). Integrating Environmental, Social and Governance (ESG) Disclosure for a Sustainable Development: An Australian Study: ESG Disclosure in Australian De Silva Lokuwaduge and Heenetigala. Business Strategy and the Environment, 26(4), 438–450. https://doi.org/10.1002/bse.1927
  39. Lubis, M. F. F., & Rokhim, R. (2021). The Effect of Environmental, Social, and Governance (ESG) Disclosure and Competitive Advantage on Companies Performance as An Implementation of Sustainable Economic Growth in Indonesia for Period of 2015-2019. IOP Conference Series: Earth and Environmental Science, 940(1), 012059. https://doi.org/10.1088/1755-1315/940/1/012059
  40. Manita, R., Bruna, M. G., Dang, R., & Houanti, L. (2018). Board gender diversity and ESG disclosure: Evidence from the USA. Journal of Applied Accounting Research, 19(2), 206–224. https://doi.org/10.1108/JAAR-01-2017-0024
  41. Nicolò, G., Zampone, G., Sannino, G., & De Iorio, S. (2022). Sustainable corporate governance and non-financial disclosure in Europe: does the gender diversity matter? Journal of Applied Accounting Research, 23(1), 227-249. doi:10.1108/jaar-04-2021-0100
  42. Popov, K., & Makeeva, E. (2022). Relationship Between Board Characteristics, ESG and Corporate Performance: A Systematic Review. Journal of Corporate Finance Research / Корпоративные Финансы | ISSN: 2073-0438, 16(4), 5-20. doi:10.17323/j.jcfr.2073-0438.16.4.2022.5-20
  43. Pramono, C., & Nasih, M. (2022). The Effect of Gender Diversity in The Boardroom and Company Growth on Environmental, Social, and Governance Disclosure (ESGD). Journal of Accounting and Investment, 23(3), 460-477. doi:10.18196/jai.v23i3.14402
  44. Prihandono, I., & S. Yuniarti, D. (2023). Indonesia Sustainability Reporting Standard: What Needs to be Improved? Padjadjaran Journal of International Law, 7(1), 1-23. doi:10.23920/pjil.v7i1.1159.
  45. Setyahuni, S. W., & Handayani, R. S. (2020). On the Value Relevance of Information on Environmental, Social, and Governance (ESG): An Evidence From Indonesia. Journal of Critical Reviews, 7(12), 50–58.
  46. Singh, V., Terjesen, S., & Vinnicombe, S. (2008). Newly appointed directors in the boardroom:. European Management Journal, 26(1), 48-58. doi:10.1016/j.emj.2007.10.002
  47. Tamimi, N., & Sebastianelli, R. (2017). Transparency among S&P 500 companies: An analysis of ESG disclosure scores. Management Decision, 55(8), 1660–1680. https://doi.org/10.1108/MD-01-2017-0018
  48. Thomson Reuters. (2017). Thomson Reuters ESG Score. https://www.esade.edu/itemsweb/biblioteca/bbdd/inbbdd/archivos/Thomson_Reuters_ESG_Scores.pdf
  49. Wahyuningtyas, E. T., & Susesti, D. A. (2023). Gender Diversity Impact on ESG Performance: Evidence from Indonesian and Malaysian Manufacturing Sector. Proceedings of the International Conference on Global Innovation and Trends in Economics and Business (ICOBIS 2022), 105-111. doi:10.2991/978-94-6463-068-8_8
  50. Wasiuzzaman, S., & Subramaniam, V. (2023). Board gender diversity and environmental, social and governance (ESG) disclosure: Is it different for developed and developing nations? Corporate Social Responsibility and Environmental Management, 30(5), 2145-2165. doi:10.1002/csr.2475
  51. Wasiuzzaman, S., & Wan Mohammad, W. M. (2020). Board gender diversity and transparency of environmental, social and governance disclosure: Evidence from Malaysia. Managerial and Decision Economics, 41(1), 145–156. https://doi.org/10.1002/mde.3099
  52. Yakovlev, I. A., Financial Research Institute, Moscow 127006, Russian Federation, Nikulina, S. I., & Financial Research Institute, Moscow 127006, Russian Federation. (2019). Indonesia's Strategy for Sustainable Finance. Financial Journal(6), 83-95. doi:10.31107/2075-1990-2019-6-83-95
  53. Zhang, J. Q., Zhu, H., & Ding, H.-b. (2013). Board Composition and Corporate Social Responsibility: An Empirical Investigation in the Post Sarbanes-Oxley Era. Journal of Business Ethics, 114(3), 381-392. doi:10.1007/s10551-012-1352-0
  54. Zumente, I., & Bistrova, J. (2021). ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice. Journal of Open Innovation: Technology, Market, and Complexity, 7(2), 127. doi:10.3390/joitmc7020127