Impact of Sustainability Disclosure on Access to Finance: Evidence from ASEAN

Abstract

The purpose of this study was to investigate how sustainability disclosure affects listed firms' access to finance in the ASEAN region. As sustainability disclosure is not typically voluntary in ASEAN enterprises, this study represents a novel research effort. There are various mixed disclosure practices for sustainability in use. As the study's population and sample, the listed companies in the ASEAN area, which includes Thailand, Cambodia, Singapore, Vietnam, Malaysia, Indonesia, and the Philippines from 2015 to 2020, were chosen. The amount and level of sustainability disclosure were evaluated using the key performance indicator (KPI) of the Global Reporting Initiative (GRI) Standards, while the accessibility to capital was evaluated using the KZ index. This study used a content analysis method based on 42 indicators to calculate the sustainability disclosure index. Three subindices—environmental, health and safety, and social—form the basis of the index. This study used a regression model to determine the overall impact of the sustainability reporting index on financial access. The findings support the negative impacts of the composite sustainability disclosure index on financial access. The study's conclusions make it abundantly evident how economically important it is to integrate corporate sustainability disclosure practices into business strategy. The study's findings are helpful to top management since they may increase sustainability disclosure to improve financial access.