Browse > Article
http://dx.doi.org/10.13106/jafeb.2020.vol7.no11.315

ASEAN Corporate Governance Scorecard: Sustainability Reporting and Firm Value  

HUSNAINI, Wahidatul (Faculty of Economics and Business, Airlangga University)
BASUKI, Basuki (Faculty of Economics and Business, Airlangga University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.11, 2020 , pp. 315-326 More about this Journal
Abstract
This study aims to test empirically whether the ASEAN Corporate Governance Scorecard (ACGS) has a positive effect on Sustainability Reporting (SR) and whether the ACGS and Sustainability Reporting (SR) have a positive effect on Firm Value (FV). The study was conducted in five ASEAN countries - Indonesia, Malaysia, Singapore, Philippines, and Thailand from 2014 - 2017. The research sample was collected from companies with the ACGS data and obtained with the help of 359 company observations. Hypothesis testing was performed using the Ordinary Least Square (OLS). The results of the study do not support all hypotheses. The ACGS has no effect on sustainability reporting. The ACGS has a significant negative effect on firm value, while sustainability reporting has a negative and insignificant effect on firm value. The ACGS and sustainability reporting are not good news for investors. This research's limitation is that companies rarely disclose the final value of the ACGS in their annual reports, so this research uses content analysis. The weakness of content analysis is the researchers' subjectivity so that the point of view between researchers is different. Besides, sustainability reporting for several ASEAN countries is voluntary, so not all companies can be sampled, which ultimately affects interpretation.
Keywords
Corporate Governance; Corporate Governance Scorecard; Sustainability Reporting; Firm Value;
Citations & Related Records
Times Cited By KSCI : 4  (Citation Analysis)
연도 인용수 순위
1 Majumdar, S. K. (1997). The impact of size and age on firmlevel performance: Some evidence from India. Review of Industrial Organization, 12, 231-241. https://doi.org/10.1023/A:1007766324749   DOI
2 Mardnly, Z., Mouselli, S., & Abdulraouf, R. (2018). Corporate governance and firm performance: an empirical evidence from syria. International Journal of Islamic and Middle Eastern Finance and Management, 11(4), 591-607. https://doi.org/10.1108/IMEFM-05-2017-0107   DOI
3 Abdelfattah, T., & Aboud, A. (2020). Tax avoidance, corporate governance, and corporate social responsibility: The case of the Egyptian capital market. Journal of International Accounting, Auditing and Taxation., 18(7), 4-9. https://doi.org/10.1016/j.intaccaudtax.2020.100304
4 Gavana, G., Gottardo, P., & Moisello, A. M. (2017). The effect of equity and bond issues on sustainability disclosure. Family vs non-family Italian firms. Social Responsibility Journal, 13(1), 126-142. https://doi.org/10.1108/SRJ-05-2016-0066   DOI
5 Ekasari, H. D., Subroto, B., Saraswati, E., & Prihatiningtias, Y. W. (2018). From theory to practice of signaling theory: sustainability reporting strategy impact on stock price crash risk with sustainability reporting quality as mediating variable. In: K. S. Sciences (Ed.), The 2018 International Conference of Organizational Innovation (vol. 2018, pp. 647-658). KnE Social Sciences. https://doi.org/10.18502/kss.v3i10.3411
6 Faisal, F., Situmorang, L. S., Achmad, T., & Prastiwi, A. (2020). The role of government regulations in enhancing corporate social responsibility disclosure and firm value. Journal of Asian Finance, Economics and Business, 7(8), 509-518. https://doi.org/10.13106/jafeb.2020.vol7.no8.509   DOI
7 Feng Kao, M., Hodgkinson, L., & Jaafar, A. (2019). Ownership structure, board of directors and firm performance: Evidence from Taiwan. Corporate Governance, 19(1), 189-216. https://doi.org/10.1108/CG-04-2018-0144   DOI
8 Freeman, R. E. (1984). Strategic management: A stakeholder approach. In: Strategic management: A stakeholder approach (Issue May 2017). London, UK: Pitman Publishing Inc.
9 Frias-Aceituno, J. V., Rodriguez-Ariza, L., & Garcia-Sanchez, I. M. (2014). Explanatory factors of integrated sustainability and financial reporting. Business Strategy and the Environment, 23, 56-72. https://doi.org/10.1002/bse.1765   DOI
10 Gherghina, S. C. (2015). Corporate governance ratings and firm value: Empirical evidence from the Bucharest stock exchange. International Journal of Economics and Financial Issues, 5(1), 97-100.
11 Haat, M. H. C., Rahman, R. A., & Mahenthiran, S. (2008). Corporate governance, transparency and performance of Malaysian companies. Managerial Auditing Journal, 3(8), 7-11. https://doi.org/10.1108/02686900810899518
12 Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies? Journal of Business Ethics, 95, 571-601. https://doi.org/10.1007/s10551-010-0441-1   DOI
13 Masud, M. A. K., Nurunnabi, M., & Bae, S. M. (2018). The effects of corporate governance on environmental sustainability reporting: Empirical evidence from South Asian countries. Asian Journal of Sustainability and Social Responsibility, 3(3), 1-26. https://doi.org/10.1186/s41180-018-0019-x   DOI
14 Michelon, G. (2011). Sustainability disclosure and reputation: A comparative study. Corporate Reputation Review, 14(2), 79-96. https://doi.org/10.1057/crr.2011.10   DOI
15 Michelon, G., & Parbonetti, A. (2012). The effect of corporate governance on sustainability disclosure. Journal of Management and Governance, 16, 477-509. https://doi.org/10.1007/s10997-010-9160-3   DOI
16 Muttakin, M. B., Mihret, D. G., & Khan, A. (2018). Corporate political connection and corporate social responsibility disclosures: A neo-pluralist hypothesis and empirical evidence. Accounting, Auditing and Accountability Journal, 31(2), 725-744. https://doi.org/10.1108/AAAJ-06-2015-2078   DOI
17 Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24(3), 403-441. https://doi.org/10.1177/0170840603024003910   DOI
18 Naciti, V. (2019). Corporate governance and board of directors: The effect of a board composition on firm sustainability performance. Journal of Cleaner Production, 237, 1-8. https://doi.org/10.1016/j.jclepro.2019.117727   DOI
19 Network, A. C. (2018). Sustainability Reporting in Asean Countries Indonesia, Malaysia, Philippines, Singapore and Thailand. Singpore: ASEAN CSR Network.
20 Odriozola, M. D., & Baraibar-Diez, E. (2017). Is corporate reputation associated with quality of csr reporting? Evidence from Spain. Corporate Social Responsibility and Environmental Management, 24(2), 121-132. https://doi.org/10.1002/csr.1399   DOI
21 Ammann, M., Oesch, D., & Schmid, M. M. (2011). Corporate governance and firm value: International evidence. Journal of Empirical Finance, 18, 36-55. https://doi.org/10.1016/j.jempfin.2010.10.003   DOI
22 Adel, C., Hussain, M. M., Mohamed, E. K. A., & Basuony, M. A. K. (2019). Is corporate governance relevant to the quality of corporate social responsibility disclosure in large European companies? International Journal of Accounting and Information Management, 27(2), 301-332. https://doi.org/10.1108/IJAIM-10-2017-0118   DOI
23 Ahmadi, A., Nakaa, N., & Bouri, A. (2018). Chief executive officer attributes, board structures, gender diversity and firm performance among French CAC 40 listed firms. Research in International Business and Finance, 44, 218-226. https://doi.org/10.1016/j.ribaf.2017.07.083   DOI
24 Al Farooque, O., & Ahulu, H. (2017). Determinants of social and economic reportings: Evidence from Australia, the UK and South african multinational enterprises. International Journal of Accounting and Information Management, 25(2), 177-200. https://doi.org/10.1108/IJAIM-01-2016-0003   DOI
25 Amran, A., & Haniffa, R. (2011). Evidence in development of sustainability reporting: A case of a developing country. Business Strategy and the Environment, 20(3), 141-156. http://eds.a.ebscohost.com.ezproxy.umuc.edu/eds/pdfviewer/pdfviewer?vid=25&sid=91788b78-3487-4720-9cb5-8bc294ad7618%40sessionmgr4004&hid=4203   DOI
26 Harjoto, M. A., & Jo, H. (2011). Corporate governance and CSR Nexus. Journal of Business Ethics, 100(1), 45-67. https://doi.org/10.1007/s10551-011-0772-6   DOI
27 Arayssi, M., Dah, M., & Jizi, M. (2016). Women on boards, sustainability reporting and firm performance. Sustainability Accounting, Management and Policy Journal, 7(3), 376-401. https://doi.org/10.1108/SAMPJ-07-2015-0055   DOI
28 Bachoo, K., Tan, R., & Wilson, M. (2013). Firm value and the quality of sustainability reporting in Australia. Australian Accounting Review, 23(1), 67-87. https://doi.org/10.1111/j.1835-2561.2012.00187.x   DOI
29 Barnett, M. L., & Salomon, R. M. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27, 1101-1122. https://doi.org/10.1002/smj   DOI
30 Hahn, R., & Kuhnen, M. (2013). Determinants of sustainability reporting: A review of results, trends, theory, and opportunities in an expanding field of research. Journal of Cleaner Production, 59, 5-21. https://doi.org/10.1016/j.jclepro.2013.07.005   DOI
31 Jo, H., & Harjoto, M. A. (2011). Corporate governance and firm value : The impact of corporate social responsibility. Journal of Business Ethics, 103(3), 351-383. https://doi.org/10.1007/s10551-011-0869-y   DOI
32 Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability performance: analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411-432. https://doi.org/10.1007/s10551-016-3099-5   DOI
33 Ionescu, L. (2012). Effects of corporate governance on firm value. Economics, Management, and Financial Markets, 7(4), 215-220.
34 Javeed, S. A., & Lefen, L. (2019). An analysis of corporate social responsibility and firm performance with moderating effects of CEO power and ownership structure: A case study of the manufacturing sector of Pakistan. Sustainability, 11, 1-25. https://doi.org/10.3390/su11010248   DOI
35 Kanagaretnam, K., Lobo, G. J., & Whalen, D. J. (2007). Does good corporate governance reduce information asymmetry around quarterly earnings announcements? Journal of Accounting and Public Policy, 26, 497-522. https://doi.org/10.1016/j.jaccpubpol.2007.05.003   DOI
36 Karaman, A. S., Kilic, M., & Uyar, A. (2018). Sustainability reporting in the aviation industry: Worldwide evidence. Sustainability Accounting, Management and Policy Journal, 9(4), 362-391. https://doi.org/10.1108/SAMPJ-12-2017-0150   DOI
37 Kend, M. (2015). Governance, firm-level characteristics and their impact on the client's voluntary sustainability disclosures and assurance decisions. Sustainability Accounting, Management and Policy Journal, 6(1), 54-78. https://doi.org/10.1108/SAMPJ-12-2013-0061   DOI
38 Price, J. M., & Sun, W. (2017). Doing good and doing bad: The impact of corporate social responsibility and irresponsibility on firm performance. Journal of Business Research, 80(July 2015), 82-97. https://doi.org/10.1016/j.jbusres.2017.07.007   DOI
39 Perez, A., Lopez, C., & Garcia-De los Salmones, M. del M. (2017). An empirical exploration of the link between reporting to stakeholders and corporate social responsibility reputation in the Spanish context. Accounting, Auditing and Accountability Journal, 30(3), 668-698. https://doi.org/10.1108/AAAJ-11-2013-1526   DOI
40 Petcharat, N., & Zaman, M. (2019). Sustainability reporting and integrated reporting perspectives of Thai-listed companies. Journal of Financial Reporting and Accounting, 17(4), 671-694. https://doi.org/10.1108/JFRA-09-2018-0073   DOI
41 Setia-Atmaja, L., Tanewski, G. A., & Skully, M. (2009). The role of dividends, debt and board structure in the governance of family controlled firms. Journal of Business Finance and Accounting, 36(7-8), 863-898. https://doi.org/10.1111/j.1468-5957.2009.02151.x   DOI
42 Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, LII(2), 737-783. https://doi.org/10.4324/9780203940136   DOI
43 Siagian, F., Siregar, S. V., & Rahadian, Y. (2013). Corporate governance, reporting quality, and firm value: Evidence from Indonesia. Journal of Accounting in Emerging Economies, 3(1), 4-20. https://doi.org/10.1108/20440831311287673   DOI
44 Sroufe, R., & Gopalakrishna-Remani, V. (2018). Management, Social sustainability, reputation, and financial performance relationships: An empirical examination of U.S. firms. Organization and Environment, 32(3), 331-362. https://doi.org/10.1177/1086026618756611
45 Sumani, S., & Roziq, A. (2020). Reciprocal capital structure and liquidity policy : Implementation of corporate governance toward corporate performance. Journal of Asian Finance, Economics and Business, 7(9), 85-93. https://doi.org/10.13106/jafeb.2020.vol7.no9.085   DOI
46 Brammer, S., Brooks, C., & Pavelin, S. (2006). Corporate social performance and stock returns: UK evidence from disaggregate measures. Financial Management, 35(3), 97-116. https://doi.org/10.1111/j.1755-053X.2006.tb00149.x   DOI
47 Becchetti, L., Ciciretti, R., Hasan, I., & Kobeissi, N. (2012). Corporate social responsibility and shareholder's value. Journal of Business Research, 65(11), 1628-1635. https://doi.org/10.1016/j.jbusres.2011.10.022   DOI
48 Berthelot, S., Coulmont, M., & Serret, V. (2012). Do investors value sustainability reports? A Canadian study. Corporate Social Responsibility and Environmental Management, 19(6), 355-363. https://doi.org/10.1002/csr.285   DOI
49 Bonazzi, L., & Islam, S. M. N. (2007). Agency theory and corporate governance: A study of the effectiveness of board in their monitoring of the CEO. Journal of Modelling in Management, 2(1), 7-23. https://doi.org/10.1108/17465660710733022   DOI
50 Broadstock, D. C., Matousek, R., Meyer, M., & Tzeremes, N. G. (2019). Does corporate social responsibility impact firms' innovation capacity? The indirect link between environmental & social governance implementation and innovation performance. Journal of Business Research, April 2018, 1. https://doi.org/10.1016/j.jbusres.2019.07.014
51 Choi, J. S., Kwak, Y. M., & Choe, C. (2010). Corporate social responsibility and corporate financial performance: Evidence from Korea. Australian Journal of Management, 35(3), 291-311. https://doi.org/10.1177/0312896210384681   DOI
52 Kuzey, C., & Uyar, A. (2017). Determinants of sustainability reporting and its impact on firm value evidence from the emerging market of Turkey. Journal of Cleaner Production, 143, 27-39. https://doi.org/https://doi.org/10.1016/j.jclepro.2016.12.153   DOI
53 Chung, K. H., & Pruitt, S. W. (1994). A simple approximation of Tobin's q. Financial Management, 23(3), 70-74.   DOI
54 Claessens, S., Djankov, S., Fan, J. P. H., & Lang, L. H. P. (2002). Disentangling the incentive and entrenchment effects of large shareholdings. Journal of Finance, 57(6), 2741-2771. https://doi.org/10.1111/1540-6261.00511   DOI
55 Coad, A., Holm, J. R., Krafft, J., & Quatraro, F. (2018). Firm age and performance. Journal of Evolutionary Economics, 28, 1-11. https://doi.org/10.1007/s00191-017-0532-6   DOI
56 Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate governance and corporate social responsibility disclosures : Evidence from an emerging economy. Journal of Business Ethics, 114, 207-223. https://doi.org/10.1007/s10551-012-1336-0   DOI
57 Kolk, A., & Pinkse, J. (2010). The integration of corporate governance in corporate social responsibility disclosures. Corporate Social Responsibility and Environmental Management, 17(1), 15-26. https://doi.org/10.1002/csr.196   DOI
58 La Porta, R., Lopez-de-silanes, F., Shleifer, A., & Vishny, R. (2000). Investor protection and corporate governance. Journal of Financial Economics, 58, 3-27. https://doi.org/https://doi.org/10.1016/S0304-405X(00)00065-9   DOI
59 Laskar, N. (2018). Impact of corporate sustainability reporting on firm performance: An empirical examination in Asia. Journal of Asia Business Studies, 12(4), 571-593. https://doi.org/10.1108/JABS-11-2016-0157   DOI
60 Laskar, N., & Maji, S. G. (2016). Corporate sustainability reporting practices in India: Myth or reality? Social Responsibility Journal, 12(4), 625-641. https://doi.org/10.1108/SRJ-05-2015-0065   DOI
61 Laskar, N., & Maji, S. G. (2018). Disclosure of corporate sustainability performance and firm performance in Asia. Asian Review of Accounting, 26(4), 414-443. https://doi.org/10.1108/ARA-02-2017-0029   DOI
62 Legendre, S., & Coderre, F. (2013). Determinants of GRI G3 application levels: The case of the fortune global 500. Corporate Social Responsibility and Environmental Management, 20(3), 182-192. https://doi.org/10.1002/csr.1285   DOI
63 Costa, C., Lages, L. F., & Hortinha, P. (2015). The bright and dark side of CSR in export markets: Its impact on innovation and performance. International Business Review, 24(5), 749-757. https://doi.org/10.1016/j.ibusrev.2015.01.008   DOI
64 The ASEAN Secretariat. (2019). ASEAN Integration Report 2019. Jakarta, Indonesia: The ASEAN Secretariat.
65 Lioui, A., & Sharma, Z. (2012). Environmental corporate social responsibility and financial performance: Disentangling direct and indirect effects. Ecological Economics, 78, 100-111. https://doi.org/10.1016/j.ecolecon.2012.04.004   DOI
66 Wahba, H. (2008). Does the market value corporate environmental responsibility? An empirical examination. Corporate Social Responsibility and Environmental Management, 15, 89-99. https://doi.org/10.1002/csr.153   DOI
67 Wang, M. C. (2016). The relationship between environmental information disclosure and firm valuation: the role of corporate governance. Quality and Quantity, 50(3), 1135-1151. https://doi.org/10.1007/s11135-015-0194-0   DOI
68 Wilmshurst, T. D., & Frostr, G. R. (2000). Corporate environmental reporting: A test of legitimacy theory. Accounting Auditing & Accountability Journal, 13(1), 10-26. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216   DOI
69 Yang, Y., Orzes, G., Jia, F., & Chen, L. (2019). Does GRI sustainability reporting pay off? An empirical investigation of publicly listed firms in China. Business and Society. 6(3), 45-43. https://doi.org/10.1177/0007650319831632
70 Zabri, S., Ahmad, K., & Wah, K. K. (2015). Corporate governance practices and firm performance: evidence from top 100 public listed companies in Malaysia. Procedia Economics and Finance, 35, 287-296. https://doi.org/10.1016/s2212-5671(16)00036-8   DOI
71 Crifo, P., Escrig-Olmedo, E., & Mottis, N. (2018). Corporate governance as a key driver of corporate sustainability in France: Influence of firm size on the ESG score: corporate sustainability ratings under reviewhe role of board members and investor relations and financial performance in Brazil. Journal of Business Ethics and Social Responsibility, 7(2), 295-309. https://doi.org/10.1108/17471111111141549
72 Dahya, J., Golubov, A., Petmezas, D., & Travlos, N. G. (2016). Governance mandates, outside directors, and acquirer performance. Journal of Corporate Finance. https://doi.org/10.1016/j.jcorpfin.2016.11.005
73 Drempetic, S., Klein, C., & Zwergel, B. (2019). The influence of firm size on the ESG score: Corporate sustainability ratings under review. Journal of Business Ethics, 5(1), 19. https://doi.org/10.1007/s10551-019-04164-1
74 Dembo, A. M. (2017). The impact of sustainability practices on the financial performance: Evidence from listed oil and gas companies in Nigeria. In: N. Capaldi, S. Idowu, & R. Schmidpeter (Eds). CSR, sustainability, ethics & corporate governance: An inclusive approach (pp. 304). Switzerland: Springer.
75 Diouf, D., & Boiral, O. (2017). The quality of sustainability reports and impression management : A stakeholder perspective. Accounting, Auditing & Accountability Journal, 3(3), 643-667. https://doi.org/https://doi.org/10.1108/AAAJ-04-2015-2044   DOI
76 Drakos, A. A., & Bekiris, F. V. (2010). Endogeneity and the relationship between board structure and firm performance: A simultaneous equation analysis for the Athens stock exchange. Managerial and Decision Economics, 31, 387-401. https://doi.org/10.1002/mde   DOI
77 Lukas, S., & Basuki, B. (2015). The implementation of good corporate and its impact on the financial performance of banking industry listed in IDX. The International Journal of Accounting and Business Society, 23(1), 47-72.
78 Loh, L., Thomas, T., & Wang, Y. (2017). Sustainability reporting and firm value: Evidence from Singapore-listed companies. Sustainability, 9(11), 1-12. https://doi.org/10.3390/su9112112
79 Lourenco, I. C., & Branco, M. C. (2013). Determinants of corporate sustainability performance in emerging markets: The Brazilian case. Journal of Cleaner Production, 57, 134-141. https://doi.org/10.1016/j.jclepro.2013.06.013   DOI
80 Lourenco, I. C., Branco, M. C., Curto, J. D., & Eugenio, T. (2012). How does the market value corporate sustainability performance? Journal of Business Ethics, 108(4), 417-428. https://doi.org/10.1007/s10551-011-1102-8   DOI
81 Machmuddah, Z., Sari, D. W., & Utomo, S. D. (2020). Corporate social responsibility, innovation and firm value. Journal of Asian Finance, Economics and Business, 7(9), 631-638. https://doi.org/10.13106/jafeb.2020.vol7.no9.631   DOI
82 Mahmood, Z., Kouser, R., Ali, W., Ahmad, Z., & Salman, T. (2018). Does corporate governance affect sustainability disclosure? A mixed methods study. Sustainability, 10(1), 1-20. https://doi.org/10.3390/su10010207   DOI