Environmental reporting, ownership structure and corporate characteristics of Indonesian listed companies

Abstract

Environmental reporting is a means to communicate the environmental performance information by an organization to its stakeholders. Information on environmental performance among others comprises the impact of the organization’s operation on climate change, the environment, performance in managing those impacts, and contribution to ecological and sustainable development. This study aims to examine the association between environmental reporting, ownership structure, and corporate characteristics, namely financial performance, board gender, and company size. Ownership structure was measured by managerial ownership, while financial performance was measured by liquidity, solvability, and profitability ratios. The study uses one hundred and twenty-eight manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2017 as a sample. Results of multivariate regression analysis indicate that managerial ownership and profitability have a positive association with environmental reporting. These results suggest that the higher the shares owned by the management, and the more profitable the company, the higher the incentives to disclose environmental information in the company’s annual report. The study provides additional insight into the capital market authority agency regarding factors that may influence listed companies to report their environmental awareness under the Global Reporting Initiative (GRI) G4 environmental framework.