Voluntary environmental and social accounting disclosure practices in the Asia-Pacific region: an international empirical test of political economy theory

The principal objective of this paper is to provide empirical evidence on the significance of cross-country (societal) variables that may assist in explaining variations in the quantity of voluntary environmental and social accounting disclosure (VESAD) information provided by organizations in annual reports across national boundaries. Using content analysis (number of sentences), 356 listed companies operating in seven Asia-Pacific nations (Australia, Singapore, Hong Kong, the Philippines, Thailand, Indonesia and Malaysia) were surveyed. Empirical tests (multiple regression analysis) conducted found that two cultural dimensions (uncertainty avoidance and masculinity) and political and civil systems are significant determinants of the quantity of VESAD information supplied by listed companies in these countries. In contrast, the legal system and equity market do not appear to be important factors in explaining variations in VESAD levels across these countries. In conclusion, it is argued that the socio-political and economic system of a nation interact to shape the perceptions of organizations in the need to release VESAD that meet social expectations as well as to avoid government regulation to preserve their own self-interests. This is consistent with Bourgeois political economy theory.