Do human rights issues matter? An empirical analysis of Indonesian companies’ reporting
ISSN: 1747-1117
Article publication date: 7 December 2018
Issue publication date: 22 March 2019
Abstract
Purpose
This paper aims to examine the Indonesian Stock Exchange-listed (IDX-listed) companies’ human rights disclosures.
Design/methodology/approach
The year-ending 2012 annual report disclosures of 75 IDX-listed companies are analyzed. The Global Reporting Initiative (GRI) guidelines are used as the disclosure index checklist.
Findings
The results show a low level of voluntary human rights disclosure (36.74 per cent). The highest level of communication is for assessment issues. Very few companies disclosed information about child labor and forced and compulsory labor. Statistical analysis reveals that board size significantly influences “human rights” communication in a positive direction. Company size, one of the control variables in this study, is also found to be positively significant. The managerial stakeholder theory partially explains the variability of these disclosures.
Research limitations/implications
The main implication of the findings is that key stakeholders do not see the importance of human rights issues to be disclosed, except for commissioners. It seems that commissioners have the spirit of the United Nation Guiding Principles (UNGPs), requiring companies to respect human rights in daily business operations. Another implication is that companies may attempt to hide certain information regarding child labor and forced and compulsory labor.
Originality/value
This paper provides insights into the disclosure practices of human rights issues in Indonesia. The paper also investigates the key determinants of human rights disclosures, an empirical test which is largely ignored in previous human rights reporting studies. This paper highlights the potency of commissioners in campaigning and promoting the importance of social responsibility on human rights for corporate sustainability.
Keywords
Acknowledgements
The authors would like to thank the participants at the 39th Annual Congress of the European Accounting Association, Maastricht, The Netherlands, May11-13, 2016, for their helpful comments on an earlier version of this paper.
Citation
Cahaya, F.R. and Hervina, R. (2019), "Do human rights issues matter? An empirical analysis of Indonesian companies’ reporting", Social Responsibility Journal, Vol. 15 No. 2, pp. 226-243. https://doi.org/10.1108/SRJ-10-2016-0171
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited