Abstract
This paper examines the relationship between ownership structure, corporate governance, and the adoption of assurance in sustainability reporting in Japan. Using stakeholder theory hypotheses, we test the impact of ownership structure (the mix of financial institution, business corporation, and foreign investors) and corporate governance characteristics (board size and independence) on assurance practices in the sustainability reporting of Nikkei 500 companies listed on the Tokyo Stock Exchange. Logit regression model results indicate that different stockholder groups and independent board directors can encourage management to publish credible sustainability reports with assurance, suggesting institutional ownership, board independence, and sustainability assurance play complementary roles in ensuring managerial accountability to external stakeholders. While this is an early analysis of the influence of recent changes in corporate governance on sustainability assurance practices in Japan, the findings have important implications for managerial practice and the policy analysis of corporate governance and sustainability reporting.
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Notes
Although the objectives of sustainability reporting and integrated reporting differ, integrated reporting overlaps with important broader aspects of sustainability reporting (Nishitani, Unerman and Kokubu, 2021).
According to the Nikkei Industry classification, the Manufacturing industry includes Mining, Foods, Textiles & Apparel, Pulp & Paper, Chemicals, Pharmaceutical, Oil and Coal, Rubber Products, Glass & Ceramics, Steel Products, Nonferrous Metals, Machinery, Shipbuilding, Automotive, Precision Instruments, Electric Machinery, and Other Manufacturing. This industry classification is widely used in the sustainability reporting literature in Japan (Akhter and Sekishita, 2019; Haider and Nishitani, 2020).
The survey has sent questionnaires to all listed and major unlisted companies every year since 2006 asking them about their CSR activities, including those relating to environment and labor.
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Japan society for the promotion of science, Grant-in-Aids for Scientific Research (B) 19H01549, Kimitaka Nishitani.
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Haider, M.B., Nishitani, K. Ownership structure, corporate governance, and assurance in sustainability reporting: evidence from Japan. Int J Discl Gov 19, 374–388 (2022). https://doi.org/10.1057/s41310-022-00149-1
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DOI: https://doi.org/10.1057/s41310-022-00149-1