Unveiling the antecedents and the outcome of materiality disclosure: insights from sustainability reporting of Malaysian public listed companies

Abstract

Purpose

The materiality principle is one of the top trends in sustainability reporting globally. Stakeholders have focused on the principle of materiality because of its vital importance in the context of sustainability. Materiality serves as a content-selection principle for determining the most significant sustainability matters to be included in sustainability reports. This has made reports more relevant for various stakeholders. Using the resource-based view and stakeholder theory, this paper aims to examine and uncover the antecedents and outcome of materiality disclosure in sustainability reporting.

Design/methodology/approach

To measure the extent of materiality disclosure, a content analysis was performed on the corporate reports of the largest listed companies in Malaysia. The relationships among the variables under investigation were examined using the partial least squares structural equation modelling technique.

Findings

While the results show that board activity, board independence and board size play significant roles as antecedents of materiality disclosure, this is not so with nationality diversity and gender diversity. In addition, the results have shown that the outcome of materiality disclosure is not significantly linked to corporate financial performance. The results show that normative stakeholder considerations are the primary motivating factor behind corporate sustainability reporting in Malaysia.

Practical implications

These results are of great interest to regulators, stakeholders, investors and companies alike. Enhancing materiality disclosure in sustainability reports can help in the transition to sustainable development and the successful achievement of the United Nations sustainable development goals.

Originality/value

To the best of the authors’ knowledge, this is the first empirical study to examine the interplay between board diversity and materiality disclosure, along with their connections to corporate financial performance.

Citation

Ngu, S.-B. and Amran, A. (2024), "Unveiling the antecedents and the outcome of materiality disclosure: insights from sustainability reporting of Malaysian public listed companies", Meditari Accountancy Research, Vol. 32 No. 6, pp. 2053-2082. https://doi.org/10.1108/MEDAR-10-2023-2206