Disclosure Pattern of Labour Practices and Decent Work and Its Impact on Corporate Financial Performance: Evidence from Asia

Abstract

Productive employment and decent work are the key elements for achieving fair globalization and poverty reduction as indicated in the International Labour Organization (ILO) Decent work agenda. The ILO adopted core labour standards to examine the labour practices all over the world, with the aim of making a balance between procedural justice and social rights. Further, Global Reporting Initiative (GRI) framework provides guidelines for reporting labour practices and decent work (LA) performance in the sustainability reporting framework. The purpose of this study is to contribute to the empirical literature by providing information about quantity and quality of disclosure on LA of four Asian countries, namely Japan, South Korea, India and Indonesia, during the period 2009–2017. Using content analysis based on GRI framework, this study finds that Japanese firms disclose more information relating to quantity and quality of LA. On the other hand, firms from Indonesia disclose least information on LA in the annual reports as compared to others. Further, the gap between quantity and quality of LA disclosure is found to be the highest in Indonesia followed by India and South Korea. Regarding the components, our results indicate that firms from Indonesia and India provide less information about the quality aspects of ‘equal remuneration for women and men’ and ‘training and education’. On the other hand, the average quality disclosure on ‘diversity and equal opportunity’ is relatively less for all the four countries. However, our results of quantile regression reveal that the positive impact of LA performance increases as we move from the lower quantile to the upper quantile of corporate financial performance. However, we find insignificant impact of LA on financial performance of firms from Indonesia.