Enhancing Sustainability Reporting Through Foreign Ownership: The Strengthening Role of Firm Size

Abstract

The exploitation of natural resources by companies, specifically in the energy sector, has led to severe environmental and social degradation, highlighting a pressing need for corporate transparency. The purpose of this research is to empirically examine the effect of foreign ownership on sustainability reporting and to determine the role of firm size as a moderating variable in this relationship. This study utilized a quantitative associative method, focusing on a population of energy sector companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2025. A purposive sampling technique was applied, resulting in a sample of 58 companies and 348 total observations. The results revealed that foreign ownership has a significant positive effect on the likelihood of companies disclosing sustainability reports. Firm size also showed a significant positive effect, indicating that larger companies tend to be more active in disclosing sustainability reports. The interaction between foreign ownership and firm size proved statistically significant, indicating that firm size strengthens the positive relationship between foreign ownership and sustainability reporting. These findings align with stakeholder theory, which states that an entity or company responds to the expectations of various stakeholder groups, including foreign investors and the public. Larger companies with greater resources tend to be more responsive to sustainability issues, especially when foreign ownership is present. This study provides a reference for the topic of sustainability reporting in promoting transparency. Practical implications are also presented for regulators, investors, and corporate management in the context of emerging markets.

Keywords:  Sustainability Reporting, Foreign Ownership, Firm Size, Energy