DETERMINANTS OF THE EXISTENCE OF EXTERNAL ASSURANCE ON SUSTAINABILITY REPORTS IN INDONESIA

The practice of sustainability reporting has obtained special attention to companies at the moment as a result of the much greater concern from stakeholders regarding sustainability issues. This has led to the growing tendency for companies to publish standalone sustainability reports in which they may disclose their social and environmental performances more thoroughly. Disclosure of sustainability activities in separate reports in the end have a similar importance to the disclosure of financial performances in financial statements. To that end, a special external assurance is required to increase the credibility of the information contained in the sustainability report, given the nature of the information that can be highly subjective. Thus, the purpose of this research is to obtain empirical evidence related to the determinants that affect the existence of external assurance on sustainability reports in Indonesia. The research was conducted quantitatively by using logistic regression model to test the hypothesis. Research population included all listed companies in Indonesia during the period of 2013-2015, whereas the sample being tested were 116 companies from that population that issue standalone sustainability reports. This research tried to find out the significant relationship between the dependent variable of Existence of External Assurance on Sustainability Reports and several independent variables, such as Profitability, Firm Size, Industry Affiliation, and Sustainability Department. The result of this research found that both Profitability and Industry Affiliation positively and significantly affect the Existence of External Assurance on Sustainability Reports. On the other hand, Firm Size actually had positive influence but not significant. Sustainability Department was also found to be an insignificant determinant to the Existence of External Assurance on Sustainability Reports