Enhancing Sustainability Reporting Among Tanzanian Listed Companies: Exploring the Influence of Firm Characteristics

Abstract

This study examines the influence of firm characteristics on the extent of
sustainability reporting among listed companies in Tanzania. Data was collected
from the annual reports of companies listed on the Dar es Salaam Stock
Exchange (DSE) spanning the period from 2016 to 2021 resulting in a panel data
set of 130 firm-year observations. These were analysed using both Ordinary
Least Squares (OLS) and Random Effects (RE) regression model techniques. The
results indicate that the size of a firm and the presence of a sustainability
committee have a significant positive relationship with the extent of sustainability
reporting. In contrast, the age of a firm exhibits a significant negative
relationship with the extent of sustainability reporting. Additionally, financial
metrics namely liquidity, gearing, and profitability as well as audit quality did
not show any significant relationship with sustainability reporting.
The findings suggest that large and young firms are more inclined to adopt
extensive sustainability reporting than their counterparts and challenge
traditional assumptions about the influence of financial attributes. This implies
that regulators such as DSE and Capital Markets and Securities Authority
(CMSA) should persist in encouraging smaller companies to keep enhancing
their sustainability reporting, supporting older firms in improving their reporting
practices and fostering awareness about the benefits of sustainability reporting
across all listed entities. Similarly, DSE and CMSA may require listed firms to
establish sustainability committees on the boards of directors to enhance
sustainability reporting disclosure.

Keywords: Sustainability reporting, Firm characteristics, Listed companies, Tanzania.