Stakeholder Pressure and Sustainability Report Quality in Indonesia

Abstract

Public companies owe stakeholders a social duty. Public companies must report all work-related performance, initiatives, and accomplishments in their sustainability reports. Many legal frameworks and requirements do not require issuers, especially publicly traded companies, to publish sustainability reports separately from annual reports. This research uses environmentally sensitive companies to distinguish between primary and secondary stakeholders in this study. The regression analysis on IDX companies in an environmentally sensitive stock index was used to determine how stakeholder pressure and sustainable reporting affect them. Pressure from stakeholders improves sustainability reporting. Government and employee pressure affect sustainability reporting quality more than consumer and investor pressure. Additionally, larger companies report sustainability better. State-owned enterprises with many workers report sustainability better. Employees expect companies to care about social and environmental issues, so more employees in one company tend to get more disclosure pressure. State-owned enterprise companies are more organised and follow government regulations, especially sustainability. Employee and government pressure improve sustainability reporting quality, but consumer and investor results are insignificant. The limitation of this study is that only using a small sample size and focusing only on environmentally friendly companies limited this study. It would be better for future research to study all Indonesian industries and use better measurement for each variable used.