Factors affecting sustainability reporting in Indonesia: The moderating role of external assurance

Type of the article: Research ArticleAbstractThe increasing demand for environmental and social impact information has made the sustainability report a crucial instrument for building stakeholder trust in corporate conduct in this era. This study aims to provide empirical findings on the impact of corporate governance mechanisms, such as independent commissioners, institutional ownership, and gender diversity, on the disclosure of sustainability reports with external assurance as a moderating variable. The study is quantitative research that employs Hayes’s moderation model bootstrapping technique. It covers 867 observations of non-financial companies listed on the Indonesia Stock Exchange over the period 2018 to 2023. Results show that independent commissioners (p < 0.01) and gender diversity (p < 0.05) positively and significantly affect sustainability report disclosure. Conversely, institutional ownership had no significant impact (p > 0.05). For the moderating effect, the interaction terms of external assurance and independent commissioners, and external assurance and institutional ownership are negatively significant (p < 0.05), indicating that external assurance weakens the relations in these cases. The interaction between external assurance and gender diversity was negative but insignificant for sustainability reporting (p > 0.05). This study concludes by examining whether the role of third-party assurance or internal governance mechanisms can positively affect the quality of reporting. The results suggest that third-party assurance, when used to enhance internal governance mechanisms, does not optimally improve the quality of reporting. The latter result reveals that third-party guarantees for non-financial firms have not amplified the effects of corporate governance mechanisms on the quality of sustainability reports.AcknowledgmentsWe want to acknowledge the Ministry of Education and Technology for its support of this study with contract numbers 102/C3/DT.05.00/PL/2025 and 19483/UN19.5.1.3/AL.04/2025. We also thank the LPPM Riau University for its research cooperation, as well as the entire team that supports this research.