Does foreign ownership affect corporate sustainability disclosure in Pakistan? A sequential mixed methods approach

The objective of this study is to investigate the potential impacts of foreign ownership on the corporate sustainability disclosure of leading non-financial companies in the context of an emerging economy of Pakistan. The study employed data from the year 2006 to 2018 gathered from the Pakistan stock exchange. Further, the data on foreign ownership and corporate sustainability disclosure obtained from the firm's annual reports and the global reporting initiatives (GRI) database. This study employed a sequential mixed methods technique. The empirical results indicate that foreign ownership has a significant impact on total sustainability disclosure (TCSRI). Whereas having an individual assessment, we found that foreign ownership is positively associated with each component (economic, social, and environmental) disclosure respectively. Moreover, our findings prove that firm size and growth are positively related to foreign ownership, TCSRI, and its aspects. In contrast, the study reveals a negative relationship among financial leverage, TCSRI, and economic, social, and environmental sustainability exposure. Summing up, the study indicates that foreign ownership effectively improves sustainability governance mechanism, and at the same time, it is also found that higher financial leverage restricts the sustainability disclosure capacity of firms. Results from this study have technical, theoretical, and policy implications for regulatory institutions, corporate management, and investors in emerging economies. Hence, we put forward the policy implications that the regulatory institutions need to reconsider the policy guidelines subject to diversification of ownership and activism of foreign shareholders in both small/large size firms to enhance the sustainability disclosure practices. Also, reduce the increasing level of financial leverage, which is curbing the firm's economic, social, and environmental reporting activities.