Governance Structures Mechanisms and Sustainability Reporting Clarity: Stakeholder Dialogue as a Catalyst

Abstract

Growing societal demands for corporate accountability have increased pressure on companies, particularly in the energy sector, to provide transparent sustainability reporting. This study examines the effects of good corporate governance mechanisms institutional ownership, managerial ownership, independent commissioners, audit committees, and the board of directors on sustainability report disclosure, with stakeholder engagement as a moderating variable. This study employed a quantitative research approach using an explanatory design with panel data from 79 Indonesian energy companies (316 firm-year observations) during 2019–2022. The data were analyzed using Moderated Multiple Regression (MMR). The results indicate that institutional ownership has a significant negative effect on sustainability report disclosure (b = ?3.2571; p = 0.020), while the other governance variables have no significant direct effects. Stakeholder engagement significantly moderates the relationship between institutional ownership and sustainability report disclosure (b = 0.4027; p = 0.022) but does not significantly moderate the remaining governance mechanisms. These findings highlight the importance of stakeholder engagement in strengthening the role of institutional investors in promoting sustainability reporting transparency in emerging economies.