Stakeholder Pressure And Sustainability Report Quality: Evidence From Indonesian Companies

Abstract

Abstract:

Research aims:

The purpose of this study is to analyze the influence of stakeholder pressure, particularly environmental pressure, employee pressure, investor pressure, and consumer pressure, as well as the existence of an independent board of commissioners and company size on the quality of sustainability reports published by industrial companies listed on the Indonesia Stock Exchange (IDX) between 2022 and 2024

Design/Methodology/Approach:

The research sample consisted of 38 companies, selected through purposive sampling. The data used in this study was secondary, obtained from annual reports and corporate sustainability reports obtained from the official website of the Indonesia Stock Exchange and the websites of each company. The statistical software package used for data analysis was SPSS version 26 Research findings:

The findings show that the existence of an independent board of commissioners affects the quality of sustainability reports. Meanwhile, pressure from the environment, employees, investors, and consumers, as well as company size, did not show any impact on the quality of these reports. Overall, these findings imply a shift in the primary determinants of sustainability reporting quality from external stakeholder-driven motivations toward internally embedded governance mechanisms under conditions of regulatory compulsion.

Theoretical contribution/ Originality:

This study contributes to the sustainability reporting literature by demonstrating that the determinants of reporting quality shift under a mandatory disclosure settings

Practitioner/Policy implication:

This study can serve as input for companies to strengthen the role of independent boards of commissioners and as consideration for regulators that internal governance may be more effective than external pressure in improving the quality of sustainability reports.

Research limitation/Implication:

This study has several limitations, namely a relatively low coefficient of determination, the use of indicators with different measurement forms that increase the complexity of the analysis, and limitations in sample selection due to the requirement that companies must be listed consecutively.

Keywords: Stakeholder Pressure, Independent Board of Commissioners, Company Size, Sustainability Report Quality