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Why Do Firms in Emerging Markets Report? A Stakeholder Theory Approach to Study the Determinants of Non-Financial Disclosure in Latin America

Ignacio J. Duran () and Pablo Rodrigo ()
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Ignacio J. Duran: Institute for Social Innovation, ESADE Business School – Ramon Llull University, Av. Torre Blanca 59, Sant Cugat del Vallès, 08172 Barcelona, Spain
Pablo Rodrigo: Strategy Department, Escuela de Negocios, Universidad Adolfo Ibáñez, Av. Padre Hurtado 750, Viña del Mar 2562340, Chile

Sustainability, 2018, vol. 10, issue 9, 1-20

Abstract: Even though literature studying the determinants of non-financial disclosure (NFD) is pervasive, Latin America has been overlooked in this tradition. In this sense, scholars have not evidenced which factors compel companies in this context to report this information despite its voluntary nature. Drawing on Stakeholder Theory as a basis, we derive eight possible antecedents of NFD from extant literature and test them in a sample of 643 Latin American firms for a 10 year span (2006–2015). Using a logit panel model, our evidence indicates that firm size, market-to-book ratio, systematic risk, and industry membership are factors that pressure companies to report. However, contrary to our conceptual development we find that profitability and regulatory quality inversely affects NFD. This leads us to posit that Latin America is unique in terms of reporting because agency costs may arise when disclosing data and also that feeble regulations could summon firms to fill this void through NFD. We thus contribute to this strand by revealing that stakeholders in this milieu are essentially different than in developed countries, and therefore the underlying reasons to engage in NFD also differ.

Keywords: determinants; Latin America; logit panel regression analysis; non-financial disclosure; Stakeholder Theory (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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