Determinants of sustainability reporting: Empirical evidence from East African Countries

Abstract

Sustainability reporting is gaining attention among industry professionals and academics. However, it has been criticized since it fails to represent the proper reporting practices of firms, with this being described as symbolic in form. Regardless of this criticism, management of firms in East Africa is increasingly adopting sustainability reporting, despite being voluntary. Therefore, the paper analyzed the determinants of sustainability reporting of East African firms. Eight years of annual reports of 74 listed firms in Kenya, Tanzania, and Uganda were used. Random and fixed effect regression techniques were employed for the estimates. The study found that firms’ specific characteristics such as size, Tobin’s Q, industry affiliation, and ownership structure have a positive and significant influence on firms’ management to adopt sustainability reporting practices. In addition, it was suggested that firms with a more considerable asset and Tobin’s Q provide more sustainability reporting than those with smaller assets and Tobin’s Q. The results further showed that firms’ age and return on assets do not influence sustainability reporting. The evidence further demonstrated that firms with foreign parent companies significantly disclosed more sustainability information than local firms. The paper concludes that the firm-specific characteristics influence their sustainability reporting practice. The study provides policy implications because it can assist the governments and regulators in these countries in guiding the firms’ reporting practices.

Keywords

• corporate reporting
• disclosure practice
• environmental sustainability
• non-financial information disclosure
• social sustainability
• sustainability reporting