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H : The positive effect of social media governance on organizational legitimacy is lower in state-owned
3b
organizations than otherwise.

2.5.3 The type of organization based on public ownership
Organizations are divided into listed organizations (LO) and non-LO. LO is wholly or partially owned by the public
because they obtain public funds in the stock exchange. Therefore, LO must share financial and certain nonfinancial
information to the stakeholders such as investors, costumers, suppliers, and other stakeholders (Alexander & Gentry,
2014). This information needs to comply with accounting standards to improve information quality (Armstrong, Barth,
Jagolinzer, & Riedl, 2010).

Non-LO have different sizes and legal types (Mantzari et al., 2017). They usually do not separate the owner and
manager; therefore, they are less dependent on financial information (Peek, Cuijpers, & Buijink, 2010). Standardized
financial information is usually not required in non-LO because they disclose the information to specific stakeholders,
not general stakeholders like LO.

Prior research found that even though LO have higher earning quality compared to non-LO (Ball & Shivakumar, 2005), LO
tend to have more opportunistic behavior. The reason is that they are pressured to deliver sound financial performance
(Hope, Thomas, & Vyas, 2013). Moreover, any sign of insolvency will be harmful to LO’s survival (Baumgartner & Dupius,
2017). Therefore, this opportunistic behavior in LO might reduce SMG’s effectiveness because managers in LO are more
likely to conceal bad information than non-LO (Campa, 2019). In this context, because frequent deceptive information
might harm organization reputation, SMG’s effectivity is expected to be weaker in LO than non-LO.
H : The positive effect of social media governance on organizational legitimacy is lower in listed organizations
3c
than otherwise.

2.6 Other Determinants of Organizational Legitimacy
Several other factors might also influence organizational legitimacy. Deegan (2019) differentiates those factors
into two categories, Social/Environmental Context and Specific Firm Characteristics. Social/Environmental Context
includes Political Connectiveness (Muttakin, Mihret, & Khan, 2018), Press Freedom (Blanc, Islam, Patten, & Branco,
2017), and Level of Democracy (De Villiers & Marques, 2016). However, these Social/Environmental factors are not
relevant because all samples are Indonesian organizations. Therefore, they are exposed to the same social and
environmental factors, except political connectedness, because some organizations are state-owned. However, this
characteristic has already been covered in the moderating variable which analyzed organizations based on stated
ownership.

Specific firm Characteristics consist of environmental/social rating (Adler, Mansi, & Pandey, 2018) and organizational
size (Adler, Mansi, Pandey, & Stringer, 2017). Environmental/social rating rates an organization based on its risk on
bio-diversity. This factor could not be applied in this research because no rating agency compares this risk across
organizational types. One variable that comparable is size. Adler et al. (2017) reveal that size influences the tendency
to use legitimacy disclosures. Other research from Zhang, Jiang, and Noorderhaven (2019) shows that organizational
size negatively affects firm performance.

120 International Conference on Sustainability
(5 Sustainability Practitioner Conference)
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