The Influence of Ownership Structure on the Extent of Sustainability Reporting Disclosure: The Mediating Role of Profitability

Abstract

Purpose – Rising demands from stakeholders, environmental issues, and the growing need for corporate openness have amplified the significance of sustainability reporting in the mining sector, which is characterized by its environmental sensitivity. Prior research has reported varying outcomes regarding how ownership structure affects the disclosure of sustainability reports and has overlooked the potential mediating effect of profitability. This research investigates how institutional, managerial, and family ownership impact sustainability report disclosure, placing profitability as a mediating factor.Methods – Quantitative associative methodology was used involving panel data analysis of 18 mining firms listed at Indonesia Stock Exchange for 2019–2024, yielding 108 observations. Panel regression, path analysis, and Sobel test were used in the analysis.Findings – Both institutional ownership (β = 0.0285; p = 0.0447) and managerial ownership (β = 0.3542; p = 0.0491), along with profitability (β = 0.3462; p = 0.0145), have a positive and significant effect on the disclosure of sustainability reports. Conversely, family ownership does not show a significant impact (p = 0.2816). Profitability strongly mediates the relationships between institutional ownership (p = 0.0092) and managerial ownership (p = 0.0422) concerning sustainability report disclosure, while it does not have a significant mediating effect in relation to family ownership (p = 0.0993).Research Implications – The findings suggest that companies should strengthen institutional investor involvement and managerial ownership to improve profitability and sustainability disclosure. Regulators should also promote governance mechanisms that enhance disclosure transparency. The study is limited to Indonesian mining companies over a six-year period.Originality – This research adds to the body of knowledge regarding sustainability disclosure by illustrating how profitability serves as a mediator between the structure of ownership and the reporting of sustainability.