The influence of firms' internationalisation and foreignness of the board on sustainability reporting : evidence from Vietnam

This research explores whether internationalization and the foreignness of the board of directors, two important international forces, motivate firms to issue sustainability reports in the context of Vietnam, a developing country. This study uses pooled and fixed effect multinomial logit regressions with a sample of 200 Vietnamese listed firms and 1387 firm-year observations from 2014 to 2020 to analyze the relationships. The empirical results show a consistently positive relationship between a firm's internationalization and sustainability reporting (SR) in Vietnam, while the board foreignness is not related to sustainability reporting. These findings indicate that when firms expand their business to foreign countries where sustainable development has been highly appreciated and adopted, they need to clarify their business operations within the acceptable range of social values by issuing sustainability reports. Meanwhile, there is no evidence that foreign directors transfer SR practices from their home countries to Vietnamese firms, as Vietnam still has a weak legal framework and a weak culture of SR. While consensus on whether internationalization and board foreignness are related to SR remains inconclusive in the literature, previous studies are few and generally investigate these relationships in countries with high levels of economic development. Our study provides evidence about these relationships in a low-to middle-income country. Our findings thus support the legitimate and institutional theories. In addition, our findings also identify the role of specific external stakeholder groups, thus expanding our understanding of the contexts in which firms issue sustainability reports. Our research, therefore, has implications for policymakers and firm decisionmakers.