Abstract
Emerging economies have increasingly paid attention to sustainability issues in the business circle. However, few studies have explored what facilitates sustainability information disclosure. This study examines how corporate governance mechanisms, particularly government ownership, affect sustainability disclosure in an emerging economy—Vietnam. By combining related research streams, including stakeholder theory, institutional perspective, and principal–agent theory, we present a hypothesis on the effect of corporate governance on sustainability reporting. The logistic regression analysis and analysis of variance on 2678 Vietnamese sample firm-years from 2010 through 2016 indicate that government ownership is negatively associated with voluntary environmental and social information disclosure. Additionally, they demonstrate that ownership concentration tends to lower non-financial information disclosure, while individual largest shareholder has a positive effect. These findings provide managers and policymakers with theoretical and practical implications to encourage firms in emerging Asian economies such as Vietnam to adopt sustainability activities and disclose social information.
Highlights
Recent years have witnessed a growing demand for companies in emerging economies such as Vietnam, Malaysia, Thailand, China, and India to take sustainability issues seriously in their management practices [1]
Variables and Measure This study examines the effect of government ownership on sustainability information disclosure in Vietnam
The results show that the portion of shares held by the largest shareholder (CONTROL) might have a tendency to lower sustainability information disclosure; this relationship is only significant in the sub-sample group where “governmental ownership dummy (GOVD)=1”
Summary
Recent years have witnessed a growing demand for companies in emerging economies such as Vietnam, Malaysia, Thailand, China, and India to take sustainability issues seriously in their management practices [1]. The influence of corporate governance mechanisms on sustainability disclosures can be different in emerging economies, in the Vietnamese context. Given these gaps in the literature, this study examines the effect of corporate governance mechanisms on sustainability information disclosure in Vietnam during the period 2010–2016. By providing evidence that government ownership offers fewer incentives to implement a high level of sustainability disclosure in the Vietnamese context, it offers empirical support for institutional and stakeholder theories as plausible explanations for antecedents of social information disclosure. This study suggests that similar to the situation in many developed countries, companies in emerging economies such as Vietnam likely disclose more sustainability information as more stakeholders are engaged in corporate governance.
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