Governance mechanism to improve sustainability report quality: the impact on information risk and stock market participation
International Journal of Quality & Reliability Management
ISSN: 0265-671X
Article publication date: 4 December 2023
Issue publication date: 8 April 2024
Abstract
Purpose
This study aims to examine the effect of sustainability report quality (SRQ) on information risk. This research also aims to examine the effect of SRQ on stock market participation through information risk.
Design/methodology/approach
The research sample includes 120 firm-years listed on the Sri Kehati Index period of 2017–2021. The hypothesis test uses firm and industry effect regression analysis. SRQ is measured by the existence of a sustainability committee and external assurance. The information risk is measured by bid-ask spread. Stock market participation is measured by volume of stock trading.
Findings
Based on the data analysis, this investigation finds that SRQ reduces information risk. This research also finds that SRQ improves stock market participation by reducing information risk.
Originality/value
First, this examination gives new evidence of SRQ to promote information environment improvement. Second, this examination contributes to providing the role of SRQ in an emerging market, such as Indonesia. Third, this examination contributes to providing the evaluation standard for sustainability reporting quality in Indonesia, since Indonesia has no specific standard for the sustainability report. Fourth, this examination contributes to filling the previous gap.
Keywords
Citation
Justina, D. and Lantara, I.W.N. (2024), "Governance mechanism to improve sustainability report quality: the impact on information risk and stock market participation", International Journal of Quality & Reliability Management, Vol. 41 No. 5, pp. 1253-1269. https://doi.org/10.1108/IJQRM-01-2023-0017
Publisher
:Emerald Publishing Limited
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