Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independence
AbstractThis study empirically analyzes how earnings management and board independence mediate the link between family ownership and environmental disclosures, using a sample of non-financial firms listed on the Indonesia Stock Exchange (IDX) for the fiscal years 2014 to 2017. Unsurprisingly, the ma...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2023-12-01
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| Series: | Cogent Social Sciences |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23311886.2023.2261233 |
| _version_ | 1797393731560669184 |
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| author | Agus Joko Pramono Rusmin Rusmin Emita W. Astami Alistair Brown |
| author_facet | Agus Joko Pramono Rusmin Rusmin Emita W. Astami Alistair Brown |
| author_sort | Agus Joko Pramono |
| collection | DOAJ |
| description | AbstractThis study empirically analyzes how earnings management and board independence mediate the link between family ownership and environmental disclosures, using a sample of non-financial firms listed on the Indonesia Stock Exchange (IDX) for the fiscal years 2014 to 2017. Unsurprisingly, the main finding from multiple regression analyses suggests a positive association between family-controlled entities and environmental disclosure, but this relationship is statistically insignificant. Yet, intriguingly, the study finds that the association between family business entities and environmental disclosures is indirect through producing high-quality financial reports and appointing independent members to the board of directors. Our study contributes to Indonesian literature on the role of earnings management and independent boards in mediating the relationship between family firms and corporate environmental performance. Specifically, our results align with the agency theory suggesting that family owners and managers act in the best interests of the entire organization and its stakeholders, thus reporting higher-quality earnings. This study also contributes to the literature on corporate governance, highlighting the critical role of an independent board of directors as a supervisory mechanism. The study has practical implications that managers of Indonesian corporations should consider increasing the proportion of independent members on the board of directors to support the implementation of the company’s environmental strategy effectively. Likewise, the study offers insight to the policymakers in enhancing the oversight role of corporate boards in limiting earnings management practices and encouraging the communication of corporate environmental information. Finally, our study contributes to the global literature, which seeks to find positive implications for family business environmental performance. |
| first_indexed | 2024-03-09T00:08:10Z |
| format | Article |
| id | doaj.art-5e0997638e11432589fde7ce463231e0 |
| institution | Directory Open Access Journal |
| issn | 2331-1886 |
| language | English |
| last_indexed | 2024-03-09T00:08:10Z |
| publishDate | 2023-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Social Sciences |
| spelling | doaj.art-5e0997638e11432589fde7ce463231e02023-12-12T12:45:37ZengTaylor & Francis GroupCogent Social Sciences2331-18862023-12-019210.1080/23311886.2023.2261233Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independenceAgus Joko Pramono0Rusmin Rusmin1Emita W. Astami2Alistair Brown3Faculty of Economics and Business, Jenderal Soedirman University, Purwokerto, IndonesiaFaculty of Business and Humanities, Universitas Teknologi Yogyakarta, Jalan Ringroad Utara, Sleman, Yogyakarta, IndonesiaFaculty of Business and Humanities, Universitas Teknologi Yogyakarta, Jalan Ringroad Utara, Sleman, Yogyakarta, IndonesiaFaculty of Business and Law, Curtin University, Kent Street, Bentley, Western AustraliaAbstractThis study empirically analyzes how earnings management and board independence mediate the link between family ownership and environmental disclosures, using a sample of non-financial firms listed on the Indonesia Stock Exchange (IDX) for the fiscal years 2014 to 2017. Unsurprisingly, the main finding from multiple regression analyses suggests a positive association between family-controlled entities and environmental disclosure, but this relationship is statistically insignificant. Yet, intriguingly, the study finds that the association between family business entities and environmental disclosures is indirect through producing high-quality financial reports and appointing independent members to the board of directors. Our study contributes to Indonesian literature on the role of earnings management and independent boards in mediating the relationship between family firms and corporate environmental performance. Specifically, our results align with the agency theory suggesting that family owners and managers act in the best interests of the entire organization and its stakeholders, thus reporting higher-quality earnings. This study also contributes to the literature on corporate governance, highlighting the critical role of an independent board of directors as a supervisory mechanism. The study has practical implications that managers of Indonesian corporations should consider increasing the proportion of independent members on the board of directors to support the implementation of the company’s environmental strategy effectively. Likewise, the study offers insight to the policymakers in enhancing the oversight role of corporate boards in limiting earnings management practices and encouraging the communication of corporate environmental information. Finally, our study contributes to the global literature, which seeks to find positive implications for family business environmental performance.https://www.tandfonline.com/doi/10.1080/23311886.2023.2261233family ownershipboard independenceearnings managementenvironmental disclosureIndonesia |
| spellingShingle | Agus Joko Pramono Rusmin Rusmin Emita W. Astami Alistair Brown Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independence Cogent Social Sciences family ownership board independence earnings management environmental disclosure Indonesia |
| title | Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independence |
| title_full | Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independence |
| title_fullStr | Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independence |
| title_full_unstemmed | Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independence |
| title_short | Impacts of family entities on environmental disclosure: Examining the mediating role of earnings management and board independence |
| title_sort | impacts of family entities on environmental disclosure examining the mediating role of earnings management and board independence |
| topic | family ownership board independence earnings management environmental disclosure Indonesia |
| url | https://www.tandfonline.com/doi/10.1080/23311886.2023.2261233 |
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