Risk committees and corporate disclosure: Evidence on risk and sustainability reporting with governance moderation

Environmental and social concerns related to sustainability can represent non-financial risks requiring effective risk management (Wong, 2014). In this context, risk committees may play a role in overseeing such risks and their related corporate disclosures. This study investigates how risk committees impact both risk and sustainability disclosure, aiming to understand how corporate governance enhances transparency and investor confidence. It also examines whether board size, independence, and institutional ownership moderate these relationships, influencing the effectiveness of risk committees in corporate reporting. Using a quantitative approach, this study analyzed 807 samples from Indonesia Stock Exchange (IDX) companies that published sustainability reports between 2019 and 2023. The results show that risk committees positively influence risk disclosure but do not significantly affect sustainability disclosure. Moderation analysis indicates that board size and independence weaken the effect on risk disclosure. Conversely, institutional ownership strengthens the impact on sustainability disclosure, but not on risk disclosure. These findings suggest risk committees are more effective for traditional risk reporting than for sustainability transparency. This study provides new insights by testing the effectiveness of risk committees in enhancing both types of disclosures. It offers practical insights for regulators, investors, and corporate leaders, underscoring the importance of risk committees in improving disclosure quality to foster transparency and trust.