HUMAN RIGHTS DISCLOSURE ON PANDEMIC REPORTING PERIOD IN INDONESIA
Abstract
The study aims to explain the effect of the pandemic reporting period, non-executive board, audit committee, and family ownership on increasing human rights disclosure. The pandemic of COVID-19 has created an economic pandemonium globally, including in Indonesia. Indonesia's independent agency of the FSA issued a public notice in March 2020, extending the reporting period to May 2020, extending two months. This extension has created an opportunity for companies to announce their human rights practice disclosure facing the oncoming turbulent times. UNGP-BHR and the Indonesian State Law No. 39 of 1999 about Human Rights are used as the disclosure index checklist. Our study uses 345 non-financial sectors listed on the Indonesia Stock Exchange (IDX) with an observation period of 2017 - 2019. The data analysis technique is panel regression. The result shows that the pandemic reporting period, the non-executive board, and the audit committee have positively affected human rights disclosure. The 2019 annual report recorded that human rights disclosure was higher in the pandemic reporting period than in the 2017 and 2018 annual reports. This research implies that companies consider the oncoming turbulent times caused by the pandemic in disclosing last year's human rights disclosure. The non-executive board and the audit committee have a spirit of UNGPs that encourages companies to implement human rights in their operations.
References
Agyei-Mensah, B. K. (2017). Does the corruption perception level of a country affect listed firms’ IFRS 7 risk disclosure compliance? Corporate Governance (Bingley), 17(4), 727–747. https://doi.org/10.1108/CG-10-2016-0195
Arena, C., Liong, R., & Vourvachis, P. (2018). Carrot or stick: CSR disclosures by Southeast Asian companies. Sustainability Accounting, Management and Policy Journal, 9(4), 422–454. https://doi.org/10.1108/SAMPJ-06-2016-0037
Arieftiara, D., Utama, S., Wardhani, R., & Rahayu, N. (2020). Contingent fit between business strategies and environmental uncertainty: The impact on corporate tax avoidance in Indonesia. Meditari Accountancy Research, 28(1), 139–167. https://doi.org/10.1108/MEDAR-05-2018-0338
Bansal, S., & Thenmozhi, M. (2020). Does concentrated founder ownership affect board independence? Role of corporate life cycle and ownership identity. Pacific Basin Finance Journal, 62, 101377.
https://doi.org/10.1016/j.pacfin.2020.101377
Benlemlih, M., & Bitar, M. (2018). Corporate Social Responsibility and investment efficiency. Journal of Business Ethics, 148(3), 647–671. https://doi.org/10.1007/s10551-016-3020-2
Cahaya, F. R., & Hervina, R. (2019). Do human rights issues matter? An empirical analysis of Indonesian companies’ reporting. Social Responsibility Journal, 15(2), 226–243. https://doi.org/10.1108/SRJ-10-2016-0171
Cahaya, F. R., Porter, S., Tower, G., & Brown, A. (2015). The Indonesian Government’s coercive pressure on labour disclosures: Conflicting interests or government ambivalence? Sustainability Accounting, Management and Policy Journal, 6(4), 475–497. https://doi.org/10.1108/SAMPJ-09-2014-0051
Christ, K. L., Rao, K. K., & Burritt, R. L. (2019). Accounting for modern slavery: an analysis of Australian listed company disclosures. Accounting, Auditing and Accountability Journal, 32(3), 836–865. https://doi.org/10.1108/AAAJ-11-2017-3242
Darmadi, S. (2016). Ownership concentration, family control, and auditor choice: Evidence from an emerging market. Asian Review of Accounting, 24(1), 19–42. https://doi.org/10.1108/ARA-06-2013-0043
Darmadi, S., & Sodikin, A. (2013). Information disclosure by family-controlled firms: The role of board independence and institutional ownership. Asian Review of Accounting, 21(3), 223–240. https://doi.org/10.1108/ARA-01-2013-0009
Duygun, M., Guney, Y., & Moin, A. (2018). Dividend policy of Indonesian listed firms: The role of families and the state. Economic Modelling, 75(July), 336–354. https://doi.org/10.1016/j.econmod.2018.07.007
Elayan, F. A., Brown, K., Li, J., & Chen, Y. (2019). The market response to mandatory conflict mineral disclosures. Journal of Business Ethics, (Unep 2011). https://doi.org/10.1007/s10551-019-04283-9
Ernst & Young. (2020, June 17). Why COVID-19 could boost ESG performance and stakeholder capitalism | EY - Global. Retrieved February 1, 2021, from https://www.ey.com/en_gl/climate-change-sustainability-services/why-covid-19-could-boost-esg-performance-and-stakeholder-capitalism
Hajawiyah, A., Adhariani, D., & Djakman, C. (2019). The sequential effect of CSR and COE: family ownership moderation. Social Responsibility Journal, 15(7), 939–954. https://doi.org/10.1108/SRJ-09-2017-0179
Hess, D. (2019). The transparency trap: Non-financial disclosure and the responsibility of business to respect human rights. American Business Law Journal, 56(1), 5–53. https://doi.org/10.1111/ablj.12134
International Labour Organization. (2020). Child labour in Indonesia and Timor-Leste (ILO in Indonesia and Timor-Leste). Retrieved January 31, 2021, from https://www.ilo.org/jakarta/areasofwork/child-labour/lang--en/index.htm
Islam, M. A., Haque, S., & Roberts, R. (2017). Human rights performance disclosure by companies with operations in high risk countries: Evidence from the Australian minerals sector. Australian Accounting Review, 27(1), 34–51. https://doi.org/10.1111/auar.12108
Kaur, S., Raman, V. A., & Singhania, M. (2016). Impact of corporate characteristics on human resource disclosures. Asian Review of Accounting, 24(4), 390–425. https://doi.org/10.1108/ARA-09-2014-0103
Kontan. (2020). Melihat dampak PSBB Jakarta terhadap ekonomi di Ibu Kota. Retrieved February 11, 2021, from https://regional.kontan.co.id/news/melihat-dampak-psbb-jakarta-terhadap-ekonomi-di-ibu-kota?page=all
Lagasio, V., & Cucari, N. (2019). Corporate governance and environmental social governance disclosure: A meta-analytical review. Corporate Social Responsibility and Environmental Management, 26(4), 701–711.
https://doi.org/10.1002/csr.1716
McKinsey & Company. (2019, August 7). Refining sustainability reporting for investors | McKinsey. Retrieved February 1, 2021, from https://www.mckinsey.com/business-functions/sustainability/our-insights/more-than-values-the-value-based-sustainability-reporting-that-investors-want
Munther, A. N. (2019). Effect of corporate governance rules on voluntary disclosure in Jordanian corporations listed with the Amman Stock Exchange (ASE): (An empirical study). Studies in Business and Economics, 14(1), 154–168. https://doi.org/10.2478/sbe-2019-0012
Otoritas Jasa Keuangan. (2015). Peraturan Otoritas Jasa Keuangan POJK Nomor 55/POJK.04/2015. Retrieved February 1, 2021, from https://www.ojk.go.id/id/kanal/pasar-modal/regulasi/peraturan-ojk/Documents/Pages/POJK- Nomor-55.POJK.04.2015/SALINAN-POJK 55. Pembentukan dan Pedoman Pelaksanaan Kerja Komite Audit.pdf
Otoritas Jasa Keuangan. (2020, March 18). Siaran Pers: OJK Longgarkan Batas Waktu Laporan Keuangan dan RUPS. Retrieved January 31, 2021, from https://www.ojk.go.id/id/berita-dan-kegiatan/siaran-pers/Pages/OJK-Longgarkan-Batas-Waktu-Laporan-Keuangan-dan-RUPS.aspx
Parsa, S., Roper, I., Muller-Camen, M., & Szigetvari, E. (2018). Have labour practices and human rights disclosures enhanced corporate accountability? The case of the GRI framework. Accounting Forum, 42(1), 47–64. https://doi.org/10.1016/j.accfor.2018.01.001
Probohudono, A. N., Tower, G., & Rusmin, R. (2013). Risk disclosure during the global financial crisis. Social Responsibility Journal, 9(1), 124–136. https://doi.org/10.1108/17471111311307859
Purkayastha, S., Veliyath, R., & George, R. (2019). The roles of family ownership and family management in the governance of agency conflicts. Journal of Business Research, 98(January), 50–64.
https://doi.org/10.1016/j.jbusres.2019.01.024
Qasim, A. (2018). Audit committee effectiveness: Reflections from the UAE. International Journal of Economics and Business Research, 15(1), 87–107. https://doi.org/10.1504/ijebr.2018.10008881
Salem, I. H., Ayadi, S. D., & Hussainey, K. (2019). Corporate governance and risk disclosure quality: Tunisian evidence. Journal of Accounting in Emerging Economies, 9(4), 567–602. https://doi.org/10.1108/JAEE-01-2019-0005
Samaha, K., Khlif, H., & Hussainey, K. (2015). The impact of board and audit committee characteristics on voluntary disclosure: A meta-analysis. Journal of International Accounting, Auditing and Taxation, 24, 13–28.
https://doi.org/10.1016/j.intaccaudtax.2014.11.001
Setiawan, D., Bandi, B., Kee Phua, L., & Trinugroho, I. (2016). Ownership structure and dividend policy in Indonesia. Journal of Asia Business Studies, 10(3), 230–252. https://doi.org/10.1108/JABS-05-2015-0053
Wahab, A. (2020). The state of human rights disclosure among sustainably certified palm oil companies in Malaysia. International Journal of Human Rights, 24(10), 1451–1474. https://doi.org/10.1080/13642987.2020.1716741
Copyright (c) 2023 Elisa Tjondro, Andrew Sugianto, Allan Allan, Richard Kusuma
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish in this journal agree to the following terms:
- Authors retain unrestricted copyright and full publishing rights. The authors grant the Publisher the right of first publication, with the work simultaneously licensed under the terms and conditions of the Creative Commons Attribution 4.0 International License.
- Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges and earlier and more extraordinary citations of published work.