Determinants of carbon emission disclosure and sustainability reporting and their implications for investors’ reactions: The case of Indonesia and Malaysia

Abstract

This study analyzed the effects of company size, leverage level, profitability, and company age on carbon emissions disclosure and sustainability reporting and the implications thereof on investor reactions. The manufacturing and mining companies listed on the Indonesian and Malaysian stock exchanges from 2017 to 2019 supplied the sample of this research. The analysis used the partial least squares approach to structural equation modeling. The results show that firm size and leverage significantly affect carbon emissions disclosure in Indonesia and Malaysia. Profitability and company age have no impact on carbon emissions disclosure in Indonesia. In Malaysia, profitability and company age do have a significant positive effect on carbon emissions disclosure. Company size has no effect in Indonesia, while in Malaysia, company size has a negative effect on sustainability reporting. Leverage level and company age have a significant positive effect on sustainability reporting in Indonesia, while in Malaysia, a company’s level of leverage and age have no impact on sustainability reporting. Profitability has a significant effect on the sustainability report in Indonesia, while in Malaysia, profitability has a significant positive impact on the sustainability report. Company size does not affect investors' reactions in Indonesia, while company size has a significant negative effect on Malaysian. A company’s level of leverage, profitability, and age do not affect investors' reactions. Carbon emissions disclosure has a significant positive effect on investors' responses in Indonesia, while in Malaysia, carbon emissions disclosure has no impact on investors' reactions. The sustainability report has a significant positive effect on investors' responses.