Analysis of sustainability reports on the dimensions of good governance using the SAFA-based framework in agricultural companies

Abstract

Purpose. This study aims to assess the implementation of good governance dimensions using the SAFA-based framework (Sustainability Assessment of Food and Agriculture Systems) within the sustainability reports of agricultural companies listed on the Indonesia Stock Exchange (IDX) for the 2023–2024 period. It also examines the impact of disclosing these governance dimensions (corporate ethics, accountability, participation, rule of law, and holistic management) on stock price increases.

Results. This research addresses a knowledge gap in sustainability reporting by examining how governance transparency influences market responses in the agricultural sector. The logistic regression model was not statistically significant overall (p = 0.103), with a Nagelkerke R² of 0.197, indicating modest explanatory power. However, holistic management was found to have a significant positive impact on stock price increases (p = 0.037; Exp(B) = 5.743), suggesting that companies disclosing this dimension were over five times more likely to experience a rise in stock value. The rule of law was marginally significant (p = 0.098), while corporate ethics, accountability, and participation had no statistically significant effect. The classification model correctly predicted 95 % of non-increasing stock values but only 20 % of increasing ones, with an overall accuracy of 70 %. Content analysis further supported these findings, indicating that companies with integrated, detailed disclosures – especially those with holistic governance – tended to receive more favourable market responses.

Scientific novelty. This study is among the first to integrate the SAFA-based framework into governance analysis within sustainability reporting and link it to capital market outcomes in the Indonesian agricultural sector. It combines quantitative modelling and narrative-based qualitative insights to understand how governance transparency affects market perception, offering a comprehensive and original perspective on sustainable corporate governance practices.

Practical value. Findings from this research offer actionable insights for corporate decision-makers, sustainability professionals, and investors. Emphasising that not all governance disclosures carry equal weight, the study encourages agricultural companies to adopt and communicate authentic, holistic governance strategies. These findings also support policymakers in developing frameworks that enhance market responsiveness to sustainability performance in emerging economies.