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Legislative action and a propensity to report: human resource management and corporate governance disclosure in Germany and Poland

M. Aluchna,Bogumił Kamiński,Martin Muster,Maria Roszkowska‐Menkes,Ihar Sahakiants,Thomas Steger,Małgorzata Wrzosek

Published 2025 in Managerial Finance

ABSTRACT

PurposeThis paper investigates the effects of the European Union’s Non-Financial Reporting Directive (NFRD) on annual disclosure related to human resource management (HRM) and corporate governance (CG) matters in Poland and Germany – two countries with notably different experiences with non-financial reporting (NFR) and a propensity to disclose non-financial information.Design/methodology/approachOur study is based on a sample of 167 enterprises in Poland and Germany that were continuously listed on major local stock exchanges over a period of five years from 2015 to 2019. To measure the outcome variables, we created disclosure indices for both HRM and CG information based on systematically selected GRI-based items that were refined by using principal component analysis (PCA). A panel analysis based on the random effect Tobit censored model was conducted to test the hypotheses of our study.FindingsOur findings show that after introducing the respective NFR legislation, the corresponding disclosure of both human resource management and corporate governance aspects improves. These positive developments are more significant in Polish than in German companies, which clearly reflects the longer tradition of NFR in the latter group. Out of the control variables, the impact of adopting GRI-based reporting and company size (measured by the natural logarithm of assets) on HRM and CG disclosure is significant.Originality/valueEmpirical evidence regarding the effects of laws and regulations on NFR quality and quantity as well as sustainable organisational practices, remains inconclusive and international comparative research is still limited. By applying our procedure for determining index items and building propensity to report indices, we strived to increase the validity of our study covering two different institutional contexts. The varying impact of the legislative action in Poland and Germany demonstrates country-specific differences in the legitimating effects of mandatory NFR.

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