Managerial Ownership and Corporate Sustainability Reporting in East Africa: Evidence from Listed Non-Financial Firms
Abstract
This study examines the effect of managerial ownership on corporate sustainability reporting among non-financial firms listed on East African Community (EAC) securities exchanges. Agency theory predicts that managerial shareholding can align managers’ interests with those of shareholders and strengthen incentives for transparent long-term reporting, although very high insider ownership may also create entrenchment risks. Using a balanced panel of 51 eligible firms from the Nairobi, Dar es Salaam, Uganda and Rwanda securities exchanges, the study analyses 510 firm-year observations covering 2015–2024. Sustainability reporting is measured using a structured Global Reporting Initiative (GRI)-based content index comprising 79 economic, environmental and social indicators scored 0 for no disclosure, 1 for partial disclosure and 2 for full disclosure, and normalized to a 0–1 scale. The analysis uses descriptive statistics, Pearson correlations and random-effects panel regression, with firm size and leverage as controls and foreign ownership, ownership concentration and institutional ownership included to isolate the managerial-ownership effect. The Hausman specification test supports the random-effects estimator (χ²(6)=4.78, p=.5727). Diagnostic tests indicate no first-order autocorrelation, no heteroscedasticity, low multicollinearity and no evidence of major functional-form misspecification. Managerial ownership has a positive and statistically significant association with sustainability reporting (β=.319, SE=.066, p<.001). The finding supports the incentive-alignment proposition of agency theory in the EAC setting and suggests that managerial equity participation is associated with stronger sustainability disclosure after accounting for other ownership structures and firm characteristics. The study contributes multi-country longitudinal evidence from an under-researched African capital-market setting and highlights the importance of combining ownership incentives with credible governance and disclosure frameworks.
Keywords: Managerial ownership, Sustainability reporting, Corporate governance, Agency theory, East African Community
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