Abstract
This study examines the relationship between stock price crash risk (SPCR) or the risk of a stock price collapse with strategy, practice, and quality of sustainability reports. This research uses archival data and verification methods. Data analysis using descriptive statistics, regression, classic assumption, and path analysis. This phenomenon arose due to the large number of SPCRs which resulted in losses for investors in the capital market. Samples were taken based on judgment sampling and found 304 reporting studied during the period from 2010-2017 (8 years). The outcomes of this study are the strategy and practice of standalone sustainability reports have a positive effect on the quality of sustainability reports. The quality of sustainability reports (SRQ) mediates the strategy and practice of standalone sustainability reports against SPCR.
Highlights
Sustainability Reports (SR) that are immediately published to the public by the company will have an impact on increasing share prices
The results of this study show the novelty that Sustainability report quality (SRQ) is only an intermediate factor which mediates the impact of the strategy for sustainability reporting on stock price crash risk (SPCR)
The strategy and practice of the stand-alone SR has a positive effect on the quality of the sustainability report
Summary
Sustainability Reports (SR) that are immediately published to the public by the company will have an impact on increasing share prices. The aims and objectives of this study: i) confirmation stakeholder theory, signaling theory, agency theory and legitimacy theory, ii) providing confirmation of investor perceptions regarding the sustainability report strategy submitted by the Board of Directors, as well as the implementation of reporting practices and the quality of SRQ disclosure in improving information reliability, iii) expected to encourage companies to evaluate risk management and improve SRQ so as to minimize the occurrence of SPCR, iv) providing empirical evidence regarding SR strategies and practices in improving the reliability, transparency and quality of disclosure information in SR,v) evaluating mandatory rules relating to SR, 6) useful for the Financial Services Authority (OJK) regarding SR that are mandatory, so that they can be used as evaluations and basis for improvement regarding the quality of sustainability reporting disclosures as a form of CSR. Conclusions and implications of the study are presented in the final section
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