International Journal of Public Administration

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Does Governance Quality Explain the

Sustainability Reporting Tendency of the Public
Sector? Worldwide Evidence

Ali Uyar, Majdi Karmani, Cemil Kuzey, Merve Kilic & Chadi Yaacoub

To cite this article: Ali Uyar, Majdi Karmani, Cemil Kuzey, Merve Kilic & Chadi Yaacoub (2022)
Does Governance Quality Explain the Sustainability Reporting Tendency of the Public Sector?
Worldwide Evidence, International Journal of Public Administration, 45:13, 931-947, DOI:
10.1080/01900692.2021.1900243

To link to this article: https://doi.org/10.1080/01900692.2021.1900243

Published online: 26 Mar 2021.

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INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION
2022, VOL. 45, NO. 13, 931–947
https://doi.org/10.1080/01900692.2021.1900243

Does Governance Quality Explain the Sustainability Reporting Tendency of the

Public Sector? Worldwide Evidence
a a b c
Ali Uyar , Majdi Karmani , Cemil Kuzey , Merve Kilic , and Chadi Yaacoubd
a
Excelia Business School, CERIIM, La Rochelle, France; bArthur J. Bauernfeind College of Business, Murray State University, Murray, Kentucky,
USA; cDepartment of International Trade and Business, Samsun University, Samsun, Turkey; dIndependent Researcher, Quebec, Canada

ABSTRACT KEYWORDS
The objective of this study is to investigate whether governance quality is associated with the Public sector; governance
sustainability reporting tendency of public sector organizations. For this purpose, we have collected quality; sustainability
the sustainability reporting numbers of the public sectors of all countries, Worldwide Governance reporting; Global Reporting
Initiative
Indicators (WGIs) data, and other controlling variables of 242 countries for 2015 and 2016 from several
sources. The results consistently and firmly support that the overall governance quality, as measured
by the average of six WGIs, is significantly associated with the sustainability reporting practices of
public sector organizations. Moreover, except for political stability, the remaining five WGIs have
significant explanatory power on sustainability reporting levels of the public sector globally. Thus, the
study largely proves the existence of a robust link between the governance performance of the public
sector and its sustainability disclosure. We conclude the paper by drawing country-level implications
and highlighting future research avenues.

Introduction
& Schoenberger-Orgad, 2011). In the European Union
In the last decades, research on corporate social responsi­ (EU), for example, organizations that operate in the public
bility (CSR) has attracted growing interest in the profes­ service represent 16% of EU’s total economy; their collec­
sional and academic world (Roper & Schoenberger-Orgad, tive impact may be crucial to economic growth and jobs if
2011). The practice of publishing CSR reports by organiza­ majority of such organizations adopt CSR practices (Ates &
tions was initially attributable to an effort to convince Büttgen, 2011). Furthermore, the limited sustainability
stakeholders of an organization’s low level of negative reporting research on the public sector has focused on
externalities, garner public trust, or rebuild public reputa­ the developed economies and neglected the insights from
tion (Sethi et al., 2017). This fad is particularly observed in developing countries (Burritt & Welch, 1997; Greiling &
the recent rise of published CSR (i.e., sustainability) Grüb, 2014; Greiling et al., 2015; Guthrie & Farneti, 2008;
reports. Since 2011, the Governance & Accountability Lodhia & Jacobs, 2013). Moreover, previous research on
Institute has revealed a continuous increase in the percen­ CSR reporting has placed comparatively less importance
tage of S&P 500 companies publishing some form of CSR on national institutions, although nationality has been
report, from 20% of the companies in 2011 to 85% in 2017 identified as a crucial factor in business ethics literature
(Governance & Accountability Institute, 2017). (De Villiers & Marques, 2016; Jacoby et al., 2019). Thus,
The vast majority of recent attempts at CSR reporting paying attention to this issue can lead to insights into why
have been conducted by listed corporations, but this bare public organizations in some countries are more likely to
fact has forsaken the role of the public sector, on which engage in sustainability reporting.
research and investigation are limited (Liu et al., 2017). In In summary, this study’s research objective is distinc­
fact, research on sustainability reporting practices is still tive in several important aspects. First, whereas many
largely dominant in the private sector rather than the studies regarding sustainability reporting are based on
public sector (Ates & Büttgen, 2011; Leal Filho et al., the private sector, little attention is given to the public
2016; Roper & Schoenberger-Orgad, 2011), although sector despite its importance as a regulator, an enforcer,
these organizations exist worldwide and issues of account­ and a market participant. A recent study asserts that the
ability, legitimacy, ethical corporate governance, and con­ public sector is still at an early stage in this respect
flicting interest in regulatory policy frequently arise (Roper (Fusco & Ricci, 2019). This study tries to fill the gap by

CONTACT Ali Uyar [email protected] Excelia Business School, Excelia Group, 102 rue de Coureilles, 17024 La Rochelle, France.
This article was accepted under the editorship of Ali Farazmand
© 2021 Taylor & Francis Group, LLC
932 A. UYAR ET AL.

exploring sustainability reporting practices in the public sector stakeholders (Marx & Van Dyk, 2011), develop
sector. Although some papers focused on sustainability policies and strategies to provide the use of resources in
reporting practices of the public sector (Che-Ku-Kassim a sustainable manner (Lynch, 2010), and be accountable
et al., 2019; Uyar et al., 2021a, 2021b), this is the first and transparent about their environmental and social
comprehensive study that investigates the association impacts (García-Sánchez et al., 2013). In that sense, sus­
between six dimensions of public governance quality tainability reporting by public sector organizations, such as
on the sustainability reporting practices of public sector national, regional, or local governments and public enter­
organizations around the world. Second, the empirical prises, may demonstrate that they deliver public services
test has been conducted by studying the sustainability effectively and efficiently by considering environmental
reporting practices of the public sector in 242 countries and social issues (Greiling & Grüb, 2014; Greiling et al.,
including both developing and developed nations. 2015). Further, sustainability reporting by the public sector
Third, data for recent years, 2015 and 2016, is collected, may increase the transparency and accountability on the
which will provide up-to-date results. Fourth, this sustainability efforts of public sector organizations (Greco
study’s scientific value lies in identifying the dimensions et al., 2015; Kaur & Lodhia, 2014) and provide national,
of governance that improve sustainability reporting regional, and local information on sustainability perfor­
practices. This article offers an empirical analysis that mance, which would, in turn, maintain sustainable devel­
specifies the institutional environments under which opment within a particular location (Ball & Bebbington,
public sector entities are more likely to engage in sus­ 2008). Despite the increasing importance of sustainability
tainability reporting. Finally, we test whether institu­ reporting, few studies examined sustainability (i.e., social
tional (i.e., governance) quality is significantly and environmental) reporting practice of the public sector
associated with the public sector’s sustainability report­ organizations (Andrades Peña et al., 2020; Che-Ku-Kassim
ing level. As public administration aims to enhance the et al., 2019; Larrinaga et al., 2018; Uyar et al., 2021a,
well-being of society, sustainability engagement is rele­ 2021b).1 Manes-Rossi et al. (2020) documented that prior
vant and a means to realize that goal (Fiorino, 2010). research mostly explored sustainability reporting in specific
Therefore, it is quite conceivable for the public sector to public sector organizations, such as higher education insti­
engage in environmentally and socially responsible tutions, local governments, and state-owned enterprises in
initiatives and report the outcome of those practices a single region or country. The current paper addresses this
through sustainability reports. The findings of this gap in the literature by exploring the sustainability
study thus provide largely policy-level rather than orga­ reporting tendency of diverse public sector organizations,
nizational-level implications. including public schools, municipalities, governmental
The remainder of this paper is structured as follows. In departments and ministries, telecommunication and postal
the next section, we provide a critical review of relevant services, and utilities authorities, among others, at a global
literature on countries’ governance of the public sector, scale.
major determinants of sustainability practices, and insti­ Engaging in CSR reporting depends on various national
tutional theory that serves to help develop our hypotheses. parameters and elements, such as legal framework, govern­
Next, the study’s methodology is outlined. This is followed mental dependency, and cultural traditions (De Villiers &
by an explanation of the study methodology and Marques, 2016; Garcia-Sanchez et al., 2016; Jacoby et al.,
a discussion of the results of our proposed hypotheses. 2019). For example, Che-Ku-Kassim et al. (2019) examined
Finally, the last section provides a conclusion, suggests the environmental reporting practice of the local govern­
implications, and outlines opportunities for future ments in Malaysia. They determined that local govern­
research. ments engage in environmental reporting to maintain
and improve their legitimacy in the absence of any regula­
tory requirements. Larrinaga et al. (2018) explored the
Literature review and development of
impact of sustainability accounting regulation on Spanish
hypotheses
public sector organizations’ sustainability reporting prac­
Public sector organizations deliver different services to the tice. They determined that, despite the new legislation, the
community or to its citizens and are generally controlled by quantity and quality of sustainability reporting practices
governments. There is an increasing concern about the remains low due to the ineffectiveness of the Spanish
environmental and social impacts of the organizational government in explaining the crucial role of the new legis­
activities of public sector organizations (Guthrie & lation on future generation. Furthermore, Uyar et al.
Farneti, 2008). Society expects governments and public (2021b) examined the country-level drivers of sustainabil­
sector organizations to perform public service responsibly ity reporting level in the public sector. They determined
(Marx & Van Dyk, 2011) by respecting the rights of public that the sustainability reporting practices of the non-public
 INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 933

sector in a country have a significant influence on the observe that significant differences exist in CSR disclosure
sustainability practices of public sector organizations. levels across countries (De Villiers & Marques, 2016;
In this section, we review the relevant literature regard­ Greiling et al., 2015; Jacoby et al., 2019). For instance,
ing the association between governance indicators and Garcia-Sanchez et al. (2016) found that the institutional
sustainability reporting. The first sub-section hypothe­ system of a country is significantly associated with corpo­
sizes the overall association of governance indicators rate transparency and CSR disclosure practices. In particu­
(i.e., the average of six Worldwide Governance lar, De Villiers and Marques (2016) documented that
Indicators [WGIs]) with sustainability reporting, whereas companies operating in countries with strong governance
the subsequent sub-sections are based on the relationship structures disclose a greater level of sustainability informa­
of each individual governance indicator with sustainabil­ tion. The lack of empirical work on the public sector leads
ity reporting. us to assume that it has a similar relationship to the private
sector. Thus, we expect public sector organizations from
countries with strong governance structures to be more
Governance indicators
likely to publish sustainability reports. We, therefore, test
The institutional theory proposes that organizations meet this hypothesis by examining the following relationship:
the institutional environment’s expectations in which
they operate (Campbell, 2007; Greiling et al., 2015). The H1. Governance quality (i.e., average of six WGIs) is
institutional environment varies among countries owing positively associated with the sustainability reporting
to the different legal policies and governance structures levels of the public sector.
that countries have established (Jacoby et al., 2019).
In the public sector, different concepts such as good
governance, sound governance, and meta-governance
Voice and accountability (V&A)
have emerged (Mishra, 2020). Irrespective of such varia­
tions, governance broadly refers to both policy formula­ Since the 1970s, voice and accountability (V&A) have
tion and implementation (Mishra, 2020). According to emerged as key factors of a country’s development and
Farazmand (2004, 2012, 2017)’s sound governance the­ sustainability. Sound governance relies on citizen engage­
ory, a sound governance system consists of ten dimen­ ment and participation in numerous forms (Farazmand,
sions, including the process, the structure, the cognition 2017). If voice takes the form of voting or protest in
and values, the constitution, organizational and institu­ democracies and revolt in authoritarian regimes
tional dimensions, management and performance, policy, (Hirschman, 1970), accountability is well known as
international and globalization forces, ethics and account­ a relationship between an organization and a set of stake­
ability, transparency, and participation and citizen holders (Baur & Schmitz, 2012). Both are considered
engagement. The World Bank adopted the seminal work important dimensions of governance (Campbell, 2007;
of Kaufmann et al. (2011) to define and identify cross- Fleck & Hanssen, 2013; Rocha Menocal & Sharma, 2008).
country governance indicators. It is assumed that Therefore, citizens’ ability to exercise their views potentially
“Governance consists of the traditions and institutions influences governance mechanisms and government prio­
by which authority in a country is exercised. This includes rities. Thus, accountability is citizens’ ability to hold lea­
the process by which governments are selected, moni­ ders, governments, and public organizations to account for
tored, and replaced; the capacity of the government to their actions (Rocha Menocal & Sharma, 2008). Kaufmann
effectively formulate and implement sound policies; and et al. (2004) used a set of indicators that measure different
the respect of citizens and the state for the institutions that aspects of the political process, civil liberties, and political
govern economic and social interactions among them” rights. However, the media’s independence plays a major
(Kaufmann et al., 2011, p. 4). Implementing widely role in monitoring authorities and holding them accoun­
accepted sustainable practices and policies depend on table for their actions (Fleck & Hanssen, 2013). Thus,
a country’s governance structure (Leal Filho et al., 2016). Kaufmann et al. (2011) evolved their indicators by appre­
In countries with a robust legal and institutional environ­ hending the ability of a country’s citizens to select their
ment, society puts more pressure on irresponsible prac­ government and measuring freedom of expression, asso­
tices and the lack of transparency in CSR issues (Jacoby ciation, and media.
et al., 2019). Therefore, CSR reporting practices have In terms of CSR, V&A in CSR research has gained
evolved from the limits of governance to occupy a more academic attention in recent years (Baur & Schmitz,
mainstream position. 2012; Campbell, 2007; De Villiers & Marques, 2016;
If governance is specific to each country according to Hossain & Alam, 2016). In countries with strong V&A
previous research, international comparative studies (i.e., strong media freedom and political accountability),
934 A. UYAR ET AL.

individuals will be more vocal about their CSR concerns The driving force for government reporting (i.e.,
(De Villiers & Marques, 2016) and demand greater financial and non-financial) is government itself and
accountability from companies about their CSR efforts the stakeholders within the government (Burritt &
(Cahan et al., 2016). In that sense, societal pressures regard­ Welch, 1997; Joseph et al., 2014; Lodhia et al., 2012).
ing CSR reporting on the public sector will result in com­ Government plays a vital role in identifying the sustain­
prehensive CSR reports (Greiling et al., 2015). Therefore, ability policies, strategies, and practices that are under­
we expect that the public sector organizations operating in taken by public sector organizations (Ball & Bebbington,
a country with strong V&A will be more likely to publish 2008; Larrinaga-Gonzélez & Pérez-Chamorro, 2008)
sustainability reports to meet the transparency and and making public policy decisions aimed at improving
accountability expectations of society and stakeholders. CSR reporting practices (Bellringer et al., 2011).
Thus, we propose the following hypothesis: Government policy can lead public sector organizations
to be transparent about and accountable for the envir­
H2. Voice and accountability are positively associated onmental and social impacts of their activities (Burritt &
with the sustainability reporting levels of the public sector. Welch, 1997) and to publish their sustainability initia­
tives through various channels, including CSR, sustain­
ability, and environmental reports (Bellringer et al.,
Political stability and absence of violence 2011). For example, national governments have control
over the greenhouse gas (GHG) reduction targets along
A greater level of political stability can lead to a stable
with GHG reporting practices of public sector organiza­
context in which reforms, policies, and strategies related
tions (Ball & Bebbington, 2008). In this vein, the effec­
to sustainability can be undertaken (García-Sánchez et al.,
tive government implementation of laws and regulations
2013). Observed political stability and absence of violence
will promote responsible practices and disclose such
or terrorism are generally associated with the rather broad
practices (De Villiers & Marques, 2016). Therefore,
principle of sustainable development (Leal Filho et al.,
higher levels of CSR disclosure are expected in countries
2016). In that sense, one could assume that political stabi­
with more government effectiveness. In line with the
lity is a real driver of corporate social performance
above discussions, we suppose that government effec­
(Ioannou & Serafeim, 2012) and thus sustainability report­
tiveness may be positively associated with sustainability
ing practices in the public sector (García-Sánchez et al.,
reporting practices in the public sector. Thus, we pro­
2013). In other words, public sector organizations are more
pose the following hypothesis:
likely to publish CSR reports in countries where govern­
ments’ likelihood to be destabilized by violence or
H4. Government effectiveness is positively associated
terrorism2 is low. Thus, we expect that political stability
with the sustainability reporting levels of the public sector.
and absence of violence are positively associated with the
number of sustainability reports published in the public
sector. We, therefore, test this hypothesis by examining the Regulatory quality
following relationship:
A growing number of studies have revealed the strong
connection between a country’s governance and the
H3. Political stability and absence of violence are posi­
quality of laws and rules that government puts in place
tively associated with the sustainability reporting levels
(La Porta et al., 1998; Sethi et al., 2017). The existence of
of the public sector.
sound policies and regulations (i.e., competition regula­
tions) in a country will promote companies to engage in
responsible and fair practices, including the disclosure of
Government effectiveness
CSR efforts (De Villiers & Marques, 2016). CSR report­
The concept of government effectiveness has been defined ing engagement strategies of public sector organizations
by The World Bank as “capturing perceptions of the qual­ are mostly guided by state regulations (Kaur & Lodhia,
ity of public services, the quality of the civil service and the 2014). Therefore, the laws and policies that governments
degree of its independence from political pressures, the endorse remain a strong indicator of the CSR reporting
quality of policy formulation and implementation, and practices in the public sector (Ball & Bebbington, 2008;
the credibility of the government’s commitment to such Dumay et al., 2010; Farneti & Guthrie, 2009; Joseph
policies” (Kaufmann et al., 2011, p. 4). A government’s et al., 2014; Lodhia et al., 2012; Lynch, 2010). In parti­
effectiveness can be assessed by its ability to juggle the cular, Lodhia et al. (2012) found that legislative require­
various channels and levers at its disposal to apply policies ments are a powerful driver of the environmental
and strategies. disclosures published by the Australian public sector.
 INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 935

Further, Joseph et al. (2014) determined that feeling H6. The rule of law is positively associated with the
coercive pressure encourages Malaysian local councils sustainability reporting levels of the public sector.
to disclose a higher sustainability information level.
Lynch (2010) empirically documented that increased Control of corruption
numbers of environmental reporting regulations have
enhanced the extent and level of environmental disclo­ Corruption may be experienced in both the public and
sures, whereas decreased numbers of environmental private sectors and in the day-to-day lives of ordinary
regulations have resulted in a decrease in Australian citizens (Keig et al., 2015; Windsor, 2014). Several coun­
state government departments’ disclosures. In line with tries are proactive in leading anti-corruption efforts. With
the above discussions, we expect that there is a positive The World Bank’s help, they develop mechanisms to
association between the regulatory quality (i.e., the exis­ improve their governance and fight formal and informal
tence of sound policies and regulations) and the level of corruption (Kaufmann et al., 2011; Keig et al., 2015; Leal
sustainability reporting in the public sector. Thus, we Filho et al., 2016; Windsor, 2014; World Bank, 1992).
propose the following hypothesis: Sound governance depends on ethical values, account­
ability requirements, and transparency structures
H5. Regulatory quality is positively associated with the (Farazmand, 2017) and cognition and values of governance
sustainability reporting levels of the public sector. structure (Farazmand, 2012). An unsound governance sys­
tem leads to a lack of institutionalization and legitimacy
and less transparency and accountability, resulting in
Rule of law higher level of corruption (Farazmand, 2012). In this
Rule of law is defined by The World Bank, based on the sense, transparency and accountability are considered to
work of Kaufmann et al. (2011, p. 4), as “the perceptions be inversely related to the degree of corruption (Alcaraz-
of the extent to which agents have confidence in and abide Quiles et al., 2015). CSR transparency and the publication
by the rules of society, and in particular the quality of of CSR reports are also significantly affected by countries’
contract enforcement, property rights, the police, and the commitment in the fight against corruption (Windsor,
courts, as well as the likelihood of crime and violence.” 2014). In particular, companies are less likely to engage in
The weakness of the rule of law is exacerbated by causing CSR reporting practices in an environment wherein official
social and environmental damage in reckless pursuit of corruption is high (Lattemann et al., 2009). Therefore, we
profits while obstructing attempts to establish legal frame­ expect that public sector organizations’ sustainability
works to govern the global economy (Gjølberg, 2011). reporting practices might be more pronounced in coun­
Further, acts of deregulation, which significantly reduce tries where corruption control is more effective. The argu­
monitoring capacity, may decrease CSR practices, lead to mentation above results in our seventh hypothesis.
irresponsible behaviors (Campbell, 2007; Tatoglu et al.,
2014), and result in a lack of CSR reporting. H7. Control of corruption is positively associated with
Regulatory quality does not prevent deviations in the sustainability reporting levels of the public sector.
terms of CSR reporting if there are problems with law
enforcement. The rule of law indicates whether legal Research methodology
and non-legal responsibilities are clearly understood,
Sample
recognized, and enacted in a society (Chapple &
Moon, 2005). Accordingly, a recent study led by The sample includes the data of 242 countries for the years
Hossain and Alam (2016) argues that, CSR cannot 2015 and 2016 to provide recent evidence on the link
ensure accountability if there is no respect for law between public sector performance and sustainability dis­
and norms despite abundant laws and regulations. closure. However, we emphasize that each year’s data is
Cahan et al. (2016) empirically documented that considered separately in further statistical analysis: that is,
CSR disclosure is generally higher in countries with we utilize panel regression analysis for testing the hypoth­
a stronger enforcement environment and with eses. The sample size was based on 484 country–years’
a greater respect for laws. In line with the arguments panel data, which was retrieved from the following two
discussed previously in this paper, we hypothesize that primary sources: the Global Reporting Initiative (GRI)
public sector organizations will be more likely to pub­ Database (GRI Database, 2017) and The World Bank
lish CSR reports in countries with a strong rule of law Open Data bank (World Bank, 2018). The GRI Database
than those with disregard for the law. Thus, we sug­ (GRI Database, 2017) was also utilized as a comprehensive,
gest the following hypothesis: reliable, and rich source of sustainability reports by prior
936 A. UYAR ET AL.

studies (Fernandez-Feijoo et al., 2014; Karaman et al., 2018; based) confirms whether our propositions hold for both
Kuzey & Uyar, 2017). GRI is an international not-for-profit types of dependent variables because some sort of sustain­
organization that issues sustainability reporting standards ability reporting with/without a specific reference to the
and has worldwide acceptance and recognition by private GRI framework could be regulated in some countries.
and public organizations (Siew, 2015). We collected the Thus, we have identified the number of both types of
data for the number of sustainability reports of the public reports for the public sector. These variables form the
sector for each country from the GRI Database (2017) as dependent variables of the study. We have downloaded
well as WGIs and other controlling data from The World the WGIs to use them as proxies for the governance quality
Bank Open Data bank (World Bank, 2018). of nations. The WGIs consist of six indicators (voice and
Data preprocessing is a crucial step before testing the accountability, political stability, government effectiveness,
hypothetical relationships. Therefore, the following pre­ regulatory quality, rule of law, and control of corruption) of
liminary steps were undertaken. Univariate and multi­ broad governance dimensions covering more than 200
variate outliers were determined using a Z-score of countries since 1996 (Kaufmann et al., 2011). They have
greater than 3 and Mahalanobis D2. In the multivariate so far been used in previous studies as proxies for institu­
analysis of the proposed models as described in tional/governance quality (Keig et al., 2015; Saona & San
section 3.5. Models, the final sample size ranged between Martín, 2016). Following prior studies (Al-Marhubi, 2004;
334 and 339 due to the large portion of cases with missing Law & Azman-Saini, 2012), we initially calculated their
values and serious outliers. average because the indicators have high inter-
correlations and test their cumulative association with sus­
tainability reporting practices. The argument is that
Variables
a nation having high-quality governance in one aspect is
Table 1 presents the definitions of the dependent, indepen­ likely to have good governance in other aspects (Al-
dent, and control variables of the study. The GRI Database Marhubi, 2004). Furthermore, we have examined each
provides the number of all sustainability reports, including metric’s individual association with the sustainability
GRI-based (i.e., with specific reference to GRI standards) reporting practices of the public sector due to each metric
and non-GRI-based reports (i.e., without specific reference measuring different dimensions of institutional quality (Al-
to GRI standards), for each nation. To test the proposed Marhubi, 2004). Moreover, the models of this study
hypotheses, we established the equations in the include the following three types of control variables: geo­
forthcoming sections for all sustainability reports, includ­ graphical vicinity variables,3 non-public sector sustainabil­
ing GRI-based and non-GRI-based (i.e., Overall), and for ity reporting levels, and other control variables (e.g.,
only GRI-based reports. The decomposition of the sustain­ economic openness and growth variables) following Uyar
ability reports into these two types (i.e., Overall and GRI- et al. (2021a, 2021b).

Table 1. The variables of the study.

Dependent variables:
PS Overall Total number of sustainability reports issued by the public sector
PS GRI Total number of GRI-based sustainability reports issued by the public sector
Independent variables:
AverageGov Average of six Worldwide Governance Indicators, which takes a value between −2.5 and 2.5
VoiceAcc Voice and accountability, which takes a value between −2.5 and 2.5
PolStab Political stability, which takes a value between −2.5 and 2.5
GovEffec Government effectiveness, which takes a value between −2.5 and 2.5
RegQual Regulatory quality, which takes a value between −2.5 and 2.5
RuleLaw Rule of law, which takes a value between −2.5 and 2.5
ContCorrupt Control of corruption, which takes a value between −2.5 and 2.5
Geographical vicinity variables:
Asia Dummy variable, takes value of 1 for countries located in Asia, otherwise 0
Europe Dummy variable, takes value of 1 for countries located in Europe, otherwise 0
Latin America Dummy variable, takes value of 1 for countries located in Latin America and Caribbean, otherwise 0
North America Dummy variable, takes value of 1 for countries located in North America, otherwise 0
Oceania Dummy variable, takes value of 1 for countries located in Oceania, otherwise 0
Non-public sector variables:
NonPS Overall Total number of sustainability reports issued by the non-public sector
NonPS GRI Total number of GRI-based sustainability reports issued by the non-public sector
Other control variables:
Import/GDP (%) Import of goods and services (% of GDP)
GDP Growth (%) GDP growth per year in percentage
 INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 937

Table 2. Descriptive statistics (for the years 2015 and 2016 cumulatively).
Variable N Mean SD Min Max
PS Overall 484 2.500 10.022 0.000 84.000
PS GRI 484 1.924 8.427 0.000 74.000
NonPS Overall 484 151.388 439.461 0.000 3778.000
NonPS GRI 484 117.624 335.318 0.000 2664.000
Import/GDP (%) 375 49.374 27.070 10.790 193.510
GDP Growth (%) 378 2.794 4.228 −28.100 28.610
AverageGov 424 0.002 0.901 −2.110 1.860
VoiceAcc 406 0.001 1.001 −2.240 1.690
PolStab 420 0.001 1.001 −2.970 1.960
GovEffec 416 0.002 1.001 −2.260 2.240
RegQual 416 0.001 1.001 −2.330 2.260
RuleLaw 416 0.002 1.001 −2.370 2.060
ContCorrupt 416 0.002 1.001 −1.810 2.300
Category N %
Asia Appearances of countries within 104 21.49
Otherwise 380 78.51
Total 484 100.00
Europe Appearances of countries within 104 21.49
Otherwise 380 78.51
Total 484 100.00
Oceania Appearances of countries within 50 10.30
Otherwise 434 89.70
Total 484 100.00
Latin America Appearances of countries within 98 20.20
Otherwise 386 79.80
Total 484 100.00
North America Appearances of countries within 10 2.10
Otherwise 474 97.90
Total 484 100.00

Descriptive statistics Finally, we analyze the country–year observations within

each continent; accordingly, the appearances of countries in
For brevity, the sample’s descriptive statistics for the years
Asia were 104 (i.e., 52 countries × 2 years), Europe were 104
2015 and 2016 are cumulatively illustrated in Table 2.
(i.e., 52 countries), Oceania were 50 (i.e., 25 countries),
However, the data of each year are treated separately during
Latin America were 98 (i.e., 49 countries), and North
panel data analysis. The results showed that the mean of PS
America were 10 (i.e., 5 countries) (Table 2).
Overall was 2.5 ± 10.02 and ranged between 0 and 84, the
mean of PS GRI was 1.92 ± 8.43 and ranged between 0 and
74, the mean of NonPS Overall was 151.39 ± 439.46, and the
Correlation analysis
mean of NonPS GRI was 117.62 ± 335.32. The maximum
value of 84 for all sustainability reports belongs to Australia, The variables used in this study include nominal categori­
showing that the Australian public sector published 84 cal variables (i.e., continents). Therefore, non-parametric
sustainability reports in 2015 and 2016 combined. South Spearman’s rank correlation analysis (Spearman, 1904) was
Korea has the highest number of GRI-based reports (74) performed as the non-parametric correlation analysis. The
published by the public sector in the same period. correlation coefficients are presented in Table 3 to demon­
Compared with the public sector, the number of reports strate the pairwise linear correlations between each pair of
published by the non-public sector is relatively high (i.e., variables of interest. The results indicated that PS Overall
151.39 is the number of all reports and 117.62 is the number had significant positive association with NonPS Overall,
of GRI-based reports on average). PS Overall and PS GRI Europe, North America, AverageGov, VoiceAcc, PolStab,
showed a high dispersion around the mean compared with GovEffec, RegQual, RuleLaw, and ContCorrupt at a 5%
their average values. In addition, Import/GDP (%) had an significance level. In contrast, it had a significant negative
average of 49.37 ± 27.07 and GDP Growth (%) had an association with Latin America at a 5% significance level. In
average of 2.79 ± 4.23 with relatively small variations addition, PS GRI had significant positive association with
around the mean values. Moreover, the mean of NonPS GRI, Europe, North America, AverageGov,
AverageGov was 0.002 ± 0.9, the mean values of VoiceAcc, PolStab, GovEffec, RegQual, RuleLaw, and
VoiceAcc, RegQual, and PolStab were almost similar with ContCorrupt at a 5% significance level. These correlations
0.001 ± 1.0, and the mean values of GovEffec, RuleLaw, and highlight the association of the private sector and the public
ContCorrupt were close to each other with 0.002 ± 1.0. sector on the sustainability reporting level. They imply that
938 A. UYAR ET AL.

Table 3. Spearman’s rank correlation coefficients.

Variables V1 V2 V3 V4 V5 V6 V7 V8 V9
1 PS Overall 1
2 PS GRI 0.936* 1
3 NonPS Overall 0.663* 0.622* 1
4 NonPS GRI 0.663* 0.624* 0.993* 1
5 Import/GDP (%) −0.134* −0.156* −0.218* −0.222* 1
6 GDP Growth (%) −0.185* −0.163* −0.099 −0.092 −0.003 1
7 AverageGov 0.458* 0.434* 0.446* 0.433* 0.225* −0.194* 1
8 VoiceAcc 0.379* 0.354* 0.354* 0.342* 0.185* −0.188* 0.860* 1
9 PolStab 0.212* 0.187* 0.159* 0.147* 0.331* −0.178* 0.850* 0.735* 1
10 GovEffec 0.527* 0.497* 0.582* 0.572* 0.110* −0.170* 0.926* 0.682* 0.708*
11 RegQual 0.513* 0.486* 0.561* 0.549* 0.146* −0.155* 0.915* 0.708* 0.656*
12 RuleLaw 0.473* 0.448* 0.472* 0.458* 0.188* −0.182* 0.966* 0.783* 0.781*
13 ContCorrupt 0.435* 0.419* 0.401* 0.389* 0.208* −0.174* 0.951* 0.776* 0.798*
14 Asia 0.054 0.062 0.212* 0.219* −0.066 0.149* −0.181* −0.401* −0.237*
15 Europe 0.274* 0.210* 0.314* 0.302* 0.224* −0.149* 0.454* 0.485* 0.324*
16 Latin America −0.093* −0.071 −0.111* −0.102* −0.119* −0.111* 0.086 0.141* 0.131*
17 North America 0.116* 0.127* 0.103* 0.067 −0.091 −0.080 0.189* 0.171* 0.169*
18 Oceania −0.066 −0.052 −0.209* −0.205* 0.200* 0.001 0.111* 0.233* 0.258*
Variables V10 V11 V12 V13 V14 V15 V16 V17 V18
10 GovEffec 1
11 RegQual 0.924* 1
12 RuleLaw 0.923* 0.906* 1
13 ContCorrupt 0.895* 0.848* 0.942* 1
14 Asia −0.003 −0.051 −0.112* −0.141* 1
15 Europe 0.455* 0.469* 0.438* 0.390* −0.273* 1
16 Latin America 0.047 0.060 −0.012 0.045 −0.263* −0.263* 1
17 North America 0.174* 0.181* 0.191* 0.187* −0.076 −0.076 −0.073 1
18 Oceania −0.053 −0.083 0.098* 0.104* −0.177* −0.177* −0.171* −0.049 1
*p < .05; Bonferroni-adjusted significance level used

the public sector is more likely to issue sustainability eliminating the independent variable “Africa”, the mul­
reports (both Overall and GRI-based reports) in nations ticollinearity was not a serious issue because the VIF
where the non-public sector also publishes sustainability values ranged between 1.01 and 2.42 in all models, which
reports. are significantly below the cutoff value of 10 (Table 3).
Moreover, the results showed a very high bivariate
significant positive relationship among AverageGov,
VoiceAcc, PolStab, GovEffec, RegQual, RuleLaw, and Models
ContCorrupt, which signals multicollinearity. Owing
Poisson regression analysis was employed because the
to the threat of multicollinearity, the independent vari­
dependent variables PS Overall and PS GRI are non-
ables of governance quality, such as VoiceAcc, PolStab,
negative count variables. The data includes countries as
GovEffec, RegQual, RuleLaw, and ContCorrupt, were
the panel and the year as the time, which is cross-
included in the proposed models at a time consistent
sectional time-series data. Initially, a random effect
with previous studies (De Villiers & Marques, 2016).
Poisson analysis was performed to test the research
Multicollinearity poses a critical risk in regression ana­
hypotheses. Moreover, to determine the robustness of
lysis, wherein it causes incorrect estimation of
the proposed models, pooled Poisson regression results
regression coefficients. Moreover, in the statistical sig­
were provided. For both regression analyses, the random
nificance tests, it affects the coefficients’ standard errors
effect Poisson and pooled Poisson, the robust standard
that minimize the independent variables’ predictive
errors estimator was employed. The proposed research
power on the dependent variables (Hair et al., 2010;
models are listed below.
Tabachnick & Fidell, 2014).
In the equations below, Model 1 and Model 1a are the
Besides, to determine whether there was a high cor­
basic models incorporating AverageGov (i.e., the average
relation among the independent variables, the variance
of six WGIs) for determining the drivers of all sustain­
inflation factor (VIF) values were calculated. At the ability reports (i.e., PS Overall) and GRI-based sustain­
beginning of the analysis, the independent variable ability reports (i.e., PS GRI) in the public sector,
“Africa” was included in the models. After performing respectively. In subsequent models, the variable
a multicollinearity analysis, “Africa” was removed from AverageGov is replaced by each governance indicator.
the models owing to the high VIF score, which was well Thus, Models 2–7 test the association of each governance
above the cutoff value of 10 (Hair et al., 2010). After indicator with all sustainability reports (including GRI-
 INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 939

based and non-GRI-based reports), whereas Models 2a– Table 4. Poisson regression and Random effect Poisson regres­
7a test the association of each governance indicator with sion analyses results (Dep. Var.: PS Overall and PS GRI).
only GRI-based reports in the public sector. For brevity, Random Effect Poisson Poisson (Pooled)
Regression Regression
we present only the following two main models from
PS Overall PS GRI PS Overall PS GRI
which we obtain the other six models by just replacing Independent variables Model 1 Model 1a Model 1 Model 1a
AverageGov with VoiceAcc (Models 2 and 2a), PolStab AverageGov 1.96*** 2.01*** 0.99*** 0.88***
(Models 3 and 3a), GovEffec (Models 4 and 4a), RegQual (6.06) (5.95) (4.25) (3.25)
NonPS GRI 0.0017*** 0.0013***
(Models 5 and 5a), RuleLaw (Models 6 and 6a), and (3.21) (3.21)
ContCorrupt (Models 7 and 7a). NonPS Overall 0.0011*** 0.00080***
(2.89) (3.28)
Model 1 : PS Overall ¼ β0 þ β1 AverageGov Asia 3.24*** 2.87*** 2.43*** 2.26***
(4.38) (3.85) (3.16) (2.75)
þ β2 NonPS Overall þ β3 Asia Europe 2.71*** 1.41* 2.53*** 2.06***
(3.28) (1.82) (3.42) (2.59)
þ β4 Europe þ β5 Latin America Latin America 3.00*** 2.44*** 1.82** 1.65**
(3.54) (2.82) (2.51) (2.17)
þ β6 North America þ β7 Oceania North America 1.71 0.98 2.25*** 1.90**
þ β8 Import=GDPð%Þ (1.60) (0.85) (2.66) (1.97)
Oceania 1.29 0.61 3.03*** 2.75***
þ β9 GDP Growthð%Þ þ ε (1.34) (0.66) (4.17) (3.60)
Import/GDP (%) −0.011** −0.013** −0.0042 −0.00085
(−2.18) (−2.48) (−0.98) (−0.20)
GDP Growth (%) −0.0070 0.0026 0.014 0.023
Model 1a : PS GRI ¼ β0 þβ1 AverageGov þ β2 NonPS GRI (−0.43) (0.14) (0.71) (1.11)
þ β3 Asia þ β4 Europe _Cons −3.01*** −2.75*** −1.95*** −2.10***
(−3.81) (−3.66) (−3.07) (−3.06)
þ β5 Latin America N 354 354 354 354
χ2 316.63*** 230.56*** 240.63*** 168.11***
þ β6 North Americaþβ7 Oceania
t statistics in parentheses.
þ β8 Import=GDP ð%Þ * p < .10
** p < .05
þ β9 GDP Growthð%Þ þ ε *** p < .01

with PS Overall and PS GRI in the random effect estima­

Findings
tors’ results, this was not confirmed by the pooled models.
The regression analysis results of Models 1 and 1a are Finally, GDP Growth does not have a significant relation­
shown in Table 4 (first two columns). AverageGov, ship with the public sector’s sustainability reporting prac­
NonPS Overall, Asia, Europe, and Latin America had tices. These results suggest that the public sector of nations
a significant positive association with PS Overall at a 1% with better governance quality is more likely to issue
significance level. On the contrary, AverageGov, NonPS a higher number of sustainability reports (i.e., both
GRI, Asia, and Latin America had a high significant posi­ Overall and GRI-based) than the nations with poorer gov­
tive association with PS GRI at a 1% significance level. In ernance quality. Besides, the public sector publishes
comparison, Europe had a weak significant positive rela­ a greater number of sustainability reports in countries
tionship with PS GRI at a 10% significant level. To deter­ where the non-public sector also issues a high number of
mine the robustness of the proposed models, we provide sustainability reports. Moreover, trade openness has
pooled Poisson regression results (Table 4 in the last two a limited and non-robust negative association with the
columns). The findings are largely consistent in both public sector’s sustainability reporting level, whereas eco­
pooled and random effect estimators’ results, with the nomic development has no significant association.
exception of North America and Oceania, resulting in The justification of the baseline models incorporating
a significant positive relationship with PS Overall and PS aggregate WGI encouraged us to investigate which govern­
GRI at a 5% significance level in both Model 1 and Model ance indicators are more consequential and what implica­
1a. Thus, the governance quality as proxied by average of tions individual WGIs have. For this reason, we have
six WGIs (AverageGov) has a consistent significant posi­ formulated the sub-research Models 2–7. The random
tive association with both GRI-based and Overall sustain­ effect Poisson regression analysis results for Models 2–7,
ability reporting level of public sector organizations in which PS Overall is the dependent variable, are provided
according to both random effect and pooled regressions. in Table 5. The results revealed that VoiceAcc, GovEffec,
This finding strongly confirms Hypothesis 1 in all model RegQual, RuleLaw, and ContCorrupt had a significant
specifications. Moreover, while the economic control vari­ positive association with PS Overall at a 5% significance
able of Import/GDP had a significant negative association level in Models 2, 4, 5, 6, and 7. These findings suggest that
940 A. UYAR ET AL.

Table 5. Random effect Poisson regression analysis results (Dep. Var.: PS Overall).
Model 2 Model 3 Model 4 Model 5 Model 6 Model 7
Independent variables PS Overall PS Overall PS Overall PS Overall PS Overall PS Overall PS Overall
VoiceAcc 0.89*** 0.16
(2.60) (0.36)
PolStab 0.50 −0.11
(1.51) (−0.37)
GovEffec 2.13*** 3.07***
(8.67) (4.85)
RegQual 0.92** −0.75*
(2.10) (−1.71)
RuleLaw 1.04*** −0.15
(3.65) (−0.32)
ContCorrupt 1.44*** −0.25
(6.22) (−0.41)
Asia 4.89*** 4.19*** 2.09*** 3.17*** 3.28*** 3.46*** 2.31**
(6.19) (5.27) (2.71) (3.23) (3.81) (4.39) (2.39)
Europe 3.86*** 4.28*** 2.39*** 3.40*** 3.31*** 3.48*** 2.64***
(5.01) (5.80) (2.84) (3.57) (4.14) (4.40) (3.06)
Latin America 3.11*** 3.18*** 2.52*** 2.93*** 3.25*** 3.48*** 2.56***
(3.75) (3.91) (3.02) (2.92) (3.65) (4.08) (3.12)
North America 4.13*** 4.46*** 1.14 3.47*** 3.02*** 2.16** 1.60
(3.81) (3.89) (1.16) (2.87) (2.67) (1.98) (1.47)
Oceania 3.58*** 3.78*** 1.24 2.59** 2.38** 1.65* 2.06**
(3.34) (3.42) (1.41) (2.21) (2.27) (1.65) (2.19)
NonPS Overall 0.0012*** 0.0013*** 0.0010** 0.00082* 0.0011** 0.0013*** 0.0013***
(2.79) (3.70) (2.55) (1.87) (2.46) (3.26) (3.26)
Import/GDP (%) −0.0012 −0.0032 −0.011** −0.0091 −0.0057 −0.0099 −0.0050
(−0.23) (−0.57) (−2.04) (−1.47) (−1.23) (−1.64) (−0.80)
GDP Growth (%) −0.0029 −0.0053 −0.018 −0.0064 −0.0013 0.0018 −0.021*
(−0.42) (−0.95) (−1.14) (−0.54) (−0.08) (0.14) (−1.76)
_cons −3.94*** −3.70*** −2.87*** −2.90*** −3.29*** −3.32*** −3.50***
(−5.17) (−4.94) (−3.52) (−3.38) (−4.08) (−4.12) (−4.15)
N 349 354 354 354 354 354 349
χ2 370.05*** 424.25*** 352.38*** 368.35*** 486.44*** 213.56*** 511.30***
t statistics in parentheses
* p < .10
** p < .05
*** p < .01

the public sector of countries that have better governance with PS Overall in Model 4, GDP Growth had no sig­
quality proxied by five indicators (i.e., VoiceAcc, GovEffec, nificant relationship with PS Overall in all models.
RegQual, RuleLaw, and ContCorrupt) is more likely to Although the proposed hypotheses were tested in
issue a higher number of sustainability reports (i.e., Models 2–7 (Table 5), we also incorporated all six
Overall) than countries with poorer governance quality. WGIs into the model simultaneously (the last column
Contrary to expectations, PolStab is not significantly asso­ of Table 5) such that GovEffec remained positive and
ciated with PS Overall, which implies that political stability significant at a 1% significance level and other govern­
(Model 3) has no significant association with the sustain­ ance dimensions did not.
ability reporting (i.e., all reports) likelihood of the public Table 6 illustrates the random effect Poisson regression
sector. These results support Hypotheses 2, 4, 5, 6, and 7 analysis results for Models 2a–7a, where PS GRI is the
but not Hypothesis 3. dependent variable. The results indicated that VoiceAcc,
Moreover, NonPS Overall and geographical regions GovEffec, RegQual, RuleLaw, and ContCorrupt were all
had a consistent significant positive association with PS significantly positively associated with PS GRI at a 5%
Overall in all models (with the exception of North significance level in Models 2a, 4a, 5a, 6a, and 7a. These
America and Oceania in Model 4). This means that the results show that the public sector organizations of coun­
tendency of issuing a higher number of sustainability tries with better governance quality are proxied by five
reports by the public sector is more likely in the contexts indicators (i.e., VoiceAcc, GovEffec, RegQual, RuleLaw,
wherein the non-public sector also publishes a high and ContCorrupt) have a higher propensity to issue
number of sustainability reports. The findings regarding a higher number of GRI-based sustainability reports
the regions show that the public sector organizations of than countries with poorer governance quality. In con­
countries located in the same continent are influenced trast to expectations, PolStab (Model 3a) did not have
by one another’s sustainable behaviors. However, while a significant association with PS GRI, which implies that
Import/GDP only had a significant negative association political stability has no significant association with the
 INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 941

Table 6. Random effect Poisson regression analysis results (Dep. Var.: PS GRI).
Model 2a Model 3a Model 4a Model 5a Model 6a Model 7a
Independent variables PS GRI PS GRI PS GRI PS GRI PS GRI PS GRI PS GRI
VoiceAcc 1.08*** 0.44
(3.27) (0.94)
PolStab 0.30 −0.42
(0.77) (−1.42)
GovEffec 2.29*** 3.45***
(9.08) (5.78)
RegQual 0.91** −0.91*
(2.00) (−1.94)
RuleLaw 1.05*** −0.71
(3.10) (−1.34)
ContCorrupt 1.60*** 0.25
(6.71) (0.39)
Asia 4.80*** 3.70*** 1.64** 2.85*** 2.88*** 2.92*** 2.12**
(5.78) (4.52) (2.23) (2.96) (3.29) (3.93) (2.31)
Europe 2.47*** 3.25*** 1.00 2.35** 2.12** 1.92*** 1.31*
(3.24) (4.11) (1.30) (2.47) (2.56) (2.58) (1.77)
Latin America 2.55*** 2.64*** 1.97** 2.59*** 2.73*** 2.93*** 1.94**
(3.05) (3.02) (2.36) (2.58) (3.02) (3.37) (2.57)
North America 3.26*** 4.09*** 0.24 2.90** 2.37* 1.08 0.79
(2.87) (3.21) (0.24) (2.18) (1.89) (0.96) (0.74)
Oceania 2.69*** 3.39*** 0.46 2.07* 1.73* 0.70 1.37
(2.62) (3.00) (0.55) (1.84) (1.70) (0.77) (1.59)
NonPS GRI 0.0020*** 0.0021*** 0.0018*** 0.0016** 0.0018*** 0.0023*** 0.0024***
(3.22) (3.30) (3.36) (2.56) (2.93) (4.12) (3.78)
Import/GDP (%) −0.0018 0.00023 −0.014*** −0.0075 −0.0058 −0.012** −0.0063
(−0.30) (0.04) (−2.65) (−1.26) (−1.14) (−1.97) (−0.99)
GDP Growth (%) 0.0072 0.0062 −0.0072 0.0056 0.0080 0.012 −0.0056
(0.97) (0.94) (−0.38) (0.41) (0.45) (0.83) (−0.51)
_cons −3.82*** −3.71*** −2.65*** −2.98*** −3.12*** −3.05*** −3.60***
(−5.29) (−4.84) (−3.60) (−3.81) (−4.13) (−4.06) (−4.59)
N 349 354 354 354 354 354 349
χ2 255.99*** 243.84*** 472.88*** 262.17*** 208.57*** 249.80*** 657.20***
t statistics in parentheses
* p < .10
** p < .05
*** p < .01

sustainability reporting (i.e., GRI-based reports) tendency Thus, random effect Poisson regression analysis results
of the public sector. In addition, NonPS GRI, Asia, and of both all sustainability reporting and GRI-based sustain­
Latin America had a significant positive association with ability reporting levels (see Tables 5 and 6) indicate that
PS GRI in all models, whereas Europe, North America, five out of six WGIs (VoiceAcc, GovEffec, RegQual,
and Oceania had a significant positive relationship with RuleLaw, and ContCorrupt) are firmly associated with
PS GRI in all models with exceptions (i.e., Europe is not the sustainability reporting levels of public sector organi­
significant in Model 4a, and North America and Oceania zations significantly and positively whereas political sta­
are not significant in Models 4a and 7a). Therefore, the bility is not. These results support Hypotheses 2, 4, 5, 6,
GRI-based sustainability reporting level of the non-public and 7 but not Hypothesis 3.
sector and geographic vicinity are significant predictors of
the public sector’s GRI-based sustainability reporting
Robustness tests
level. Furthermore, Import/GDP (%) had a significant
negative relationship with PS GRI in Models 4a and 7a. For robustness, the pooled Poisson estimator’s results for
The results showed that GDP Growth (%) had no signifi­ Models 2–7 and 2a–7a are run, where PS Overall and PS
cant relationship with PS GRI in each model. Hence, GRI are the dependent variables. The proposed models’
while economic development is not a significant predictor results were mostly consistent in both the pooled Poisson
of the public sector’s GRI-based sustainability reporting and random effect Poisson estimator’s results, with minor
level, trade openness is a non-robust and negative pre­ differences. According to the results, in addition to five
dictor. Again, having included all six WGIs into the significant variables found in the random effect estima­
equation simultaneously (the last column of Table 6), tor’s results (VoiceAcc, GovEffec, RegQual, RuleLaw, and
GovEffec remained positive and significant at a 1% sig­ ContCorrupt), PolStab was found to have a significant
nificance level while the other governance indicators positive association with PS Overall in the pooled Poisson
did not. regression analysis. Furthermore, all regions were
942 A. UYAR ET AL.

significant in all models. Finally, Import/GDP (%) and The findings proved the positive association between the
GDP Growth had no significant association with PS V&A governance dimension and the public sector’s sus­
Overall in all models in the pooled Poisson regression tainability reporting level. While the voice component of
analysis. The model incorporating all six WGIs (the last this governance dimension measures stakeholders’ ability
column) confirmed the positive significance of GovEffec to voice their demands in democracies (Hirschman, 1970),
but yielded a negative sign for ContCorrupt. accountability measures the propensity of government and
Similarly, the pooled Poisson regression analysis public organizations to account for their actions (Rocha
results for the public sector’s GRI-based sustainability Menocal & Sharma, 2008). Indeed, both of these compo­
reporting are mostly consistent with the random effect nents are at the center of interactions between institutions
Poisson regression analysis results. Accordingly, and stakeholders on sustainability issues. In a free speech
GovEffec, RegQual, RuleLaw, and ContCorrupt had environment, stakeholders can make their voices heard by
a significant positive association with PS GRI in both institutions and ask them to behave in a more socially
the pooled Poisson and random effect Poisson regres­ responsible way. If governors positively perceive this mes­
sion analyses, and PolStab was not a significant determi­ sage, they respond to them by undertaking concrete steps
nant in both the pooled Poisson and random effect and accounting for what they do. Thus, our finding verifies
Poisson regression analyses results. In addition, while the existence of this reciprocal relationship between gover­
VoiceAcc was significant in the random effect Poisson nors and stakeholders.
estimator, it became an insignificant variable in the In all the study models, we consistently failed to find
pooled Poisson regression. Control variables were also a significant association between political stability and
largely consistent with the random effect Poisson regres­ absence of violence and issuing sustainability reports by
sion analysis, with some minor differences. the public sector. The lack of a link between this dimen­
The authors did not include the outputs of the sion of governance indicators and sustainability reporting
robustness tests in the manuscript not to overload it may be attributable to three reasons. First, political stabi­
with too many tables and because of page constraints lity and absence of violence do not have precise direction
of the journal. However, they are available from the in association with sustainability disclosure by the public
authors upon request. sector.4 It can be inferred that political instability does not
significantly matter as long as policymaking is coherent in
a country (Leal Filho et al., 2016). Second, CSR initiatives
Discussion might play a substituting role in nations that are charac­
terized by a weak political system (Amaeshi et al., 2006).
In this study, we mainly test whether public governance
Third, as long as the other characteristics of governance
quality is a driving force behind the public sector’s
(i.e., other dimensions of WGIs) function well, they fill the
sustainability reporting practices. Primarily, the results gap caused by political instability.
largely proved a significant association between govern­ We have found that government effectiveness is
ance quality and the public sector’s sustainability report­ a significant determinant of sustainability reporting prac­
ing behavior. In the following paragraphs, we will tices in the public sector. This dimension of governance
discuss the findings along with previous literature, as indicators is characterized by the quality of services public
documented earlier in the relevant sections of this paper. institutions deliver, the quality of policymaking and imple­
The empirical evidence indicates that disclosures of mentation, the reliability of government’s dedication to
sustainable practices are closely associated with the institu­ such policies, and the extent of its independence from
tional environment (Leal Filho et al., 2016). In other words, political pressures (Kaufmann et al., 2011). In this respect,
the variations in the governance practices of countries sustainability reporting might signify the highlighted char­
across the world manifest themselves as tendencies to acteristics of government effectiveness to attract foreign
issue sustainability reports (Freeman & Hasnaoui, 2011). investments (Goyal, 2006). Moreover, governments in
In this significant association, we assume the effective for­ countries where CSR is perceived as a strategic issue
mulation and implementation of sound social and envir­ might be showing their commitment to CSR initiatives
onmental policies encompassing all components of society actively rather than being passive objects of change
(Kaufmann et al., 2011). This means that the boundaries of (Steurer, 2010). Our results are also in line with the findings
governance are widening to address the concerns of differ­ and assertions of previous studies conducted in different
ent components of societies (Doppelt, 2017). Our findings contexts (Cahan et al., 2016; Ioannou & Serafeim, 2012).
are consistent with previous studies in the private sector The association between regulatory quality and sus­
that proved a significant link between institutional devel­ tainability reporting was confirmed by both random effect
opment and CSR reporting (De Villiers & Marques, 2016). and pooled Poisson regression analyses. The regulatory
 INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 943

quality dimension of governance indicators measures the the other five dimensions (voice and accountability, gov­
formulation and implementation of sound policies and ernment effectiveness, regulatory quality, rule of law, and
regulations that support private sector development control of corruption) are driving factors of sustainability
(Kaufmann et al., 2011). This variable’s statistically sig­ reporting practices. Although we observed differences
nificant coefficient means that “hard law” is necessary and between models to some extent, the results largely confirm
consequential to drive organizations to comply with reg­ the tests’ robustness in both the random effect and pooled
ulations (Gjølberg, 2011). Poisson regression analyses.
The rule of law is a significant determinant of sustain­ As a secondary output of this study, we find that
ability reporting in all model specifications, which shows geographic vicinity is influential in explaining the sustain­
the results’ robustness. From the definitions of regula­ ability reporting behavior of the public sector so that
tory quality and the rule of law, it is understood that public organizations in the same continent act similarly.
while regulatory quality is more aligned with enacting However, we cannot draw the same conclusion concern­
sound regulations, the rule of law is more aligned with ing economic development factors. Trade openness, as
enforcement mechanisms (Kaufmann et al., 2011). measured by the ratio of import to GDP and GDP growth
Thus, the rule of law is expected to be particularly do not consistently explain the public sector’s tendency to
influential in punishing deviations from environmen­ issue sustainability reports, with some minor exceptions.
tally and socially responsible practices and having higher Third, it can be said that the adoption of a GRI frame­
deterrent effects on social and environmental violations. work appears to be globally accepted, as demonstrated by
The results firmly indicate that corruption control is descriptive statistics. Moreover, the public sector is far
a consistent determinant of sustainability reporting by the behind the private sector regarding the number of sus­
public sector. Control of corruption means ensuring that tainability reports issued. Thus, more organizations from
public power is not exercised for private gain (Kaufmann the public sector are recommended to issue sustainability
et al., 2011; Uhlenbruck et al., 2006), and it is particularly reports to catch up with the private sector.
relevant for the social dimension of sustainability concerns. This study has several country-level implications rather
In cases of lack of control of corruption, the private sector than organization-level implications. As theoretical impli­
may seek privileges from the public sector through bribery cations, the findings confirm the validity of institutional
and other illegal instruments, which leads to discouraging (Greiling et al., 2015) and sound governance (Farazmand,
CSR activities (Keig et al., 2015; Windsor, 2014). Thus, the 2004) theories. In line with institutional theory, the public
robust control of corruption by the public sector may sector tries to meet the expectations of stakeholders and
ensure and encourage CSR practices, which eventually institutional environment in which they function by issu­
leads to the issuance of sustainability disclosures. ing sustainability reports. In accordance with sound gov­
ernance theory (Farazmand, 2012, 2017), a sound
governance system that is characterized by high ethical
Conclusion
values, transparent and accountable governance structures
The objective of this study was to investigate whether may lead to a higher tendency of sustainability reporting in
governance quality is associated with the sustainability the public sector organizations. The practical implications
reporting practices of public sector organizations around of the study are as follows. First, sustainability reports are
the world. Although the association of governance quality a tool of stakeholder communication not only for the
on various other organizational forms, in particular private private sector but also for the public sector. In the content
ones, has been tested before, this is the first study that aims of sustainability reports, organizations disclose how they
at investigating the association of governance quality with perform their activities by caring for people and the planet.
sustainability reporting practices of public sector organiza­ Hence, the public sector’s sustainability reporting practice
tions. Indeed, sustainability reporting practices originated is an indication of its sensitivity toward society and the
in the private sector (i.e., firms); however, they diffused to planet. Second, this study showed that the institutional
public sector organizations, such as public schools, munici­ quality of the public sector shows itself through sustain­
palities, ministries, and city governance authorities. ability reporting. The good governance quality proxied by
First, the results consistently and strongly support that five indicators (V&A, government effectiveness, regulatory
governance quality is associated with public sector organi­ quality, rule of law, and control of corruption) is
zations’ sustainability reporting level. Subsequently, we a significant predictor of sustainability reporting by the
have tested which governance indicators are most conse­ public sector. Therefore, the countries that score low in
quential, assuming that all six indicators are presumably governance quality indicators are advised to advance the
relevant in driving the public sector to issue sustainability current situation by undertaking relevant governance
reports. Except for political stability, we have proved that all reforms that eventually are likely to stimulate sustainable
944 A. UYAR ET AL.

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