Legitimacy Strategies in Indonesian State-Owned Banks: SDG Disclosure and Earnings Management across the Pre- and Post-PSAK 71 Periods

Abstract

This study examines whether earnings-management intensity is associated with Sustainable Development Goal (SDG) disclosure and whether the association differs across the pre- and post-PSAK 71 reporting periods in Indonesian state-owned listed banks. The study treats listed state-owned banks as a distinct legitimacy regime characterized by state ownership, public-policy mandates, multiple accountability principals, and heightened public scrutiny. The sample comprises Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia, and Bank Tabungan Negara during 2015–2025, yielding 44 firm-year observations. SDG disclosure is measured by the breadth of explicitly mapped SDGs in annual reports, while earnings-management intensity is proxied by absolute discretionary loan-loss provisions. The primary analysis employs bank fixed effects with robust standard errors. SDG disclosure increases substantially after 2020, while the association between earnings-management intensity and SDG disclosure is sensitive to model specification and overlapping institutional changes. The findings highlight state ownership as an important institutional context in understanding sustainability disclosure and accounting discretion.