Accounting is deeply embedded within the social, economic and institutional contexts in which it operates. A country’s formal and informal institutions have a first-order effect in shaping accounting practices and the development of the accounting profession (Wong, 2016; Wysocki, 2011). Rapid technological advancement, growing automation and the emergence of complex business models have transformed how organizations create, manage and report value (Cao, 2023; Efferin and Hutomo, 2021). Evolving financing mechanisms, workforce dynamics and pressures for sustainable operations have reshaped the purpose of accounting (Hofstede et al., 2011; Inglehart et al., 2014). Growing societal expectations for sustainability and ethical responsibility have expanded accounting’s purpose beyond traditional financial reporting, positioning the profession at the intersection of economic, environmental and social transformation (Cao, 2023).
As discussed in Kristanto and Cao (2024), Indonesia, as one of the most dynamic emerging economies, provides a unique context to explore these transformations and advance theory and practice in accounting and accountability. Among the ASEAN-5 countries (i.e. Indonesia, Malaysia, Thailand, Singapore and the Philippines), Indonesia has the largest GDP (World Bank, 2022), and the economic growth rates surpass both global and regional averages (World Bank, 2022; International Monetary Fund, 2023). With the world’s fourth-largest population (United Nations, 2023), Indonesia thus has significant economic influence. From an environmental perspective, Indonesia plays a critical global role as it hosts the third-largest tropical rainforest, extensive peatlands and mangrove ecosystems that are essential for carbon storage and biodiversity preservation (World Bank, 2022).
These challenges reflect Indonesia’s unique institutional landscape and distinctive context, where formal institutions, such as corporate governance systems, legal frameworks and regulatory enforcement, interact with informal institutions, including collectivist values, religious norms and political networks (Hofstede et al., 2011; Inglehart et al., 2014; Efferin and Hutomo, 2021; Joni et al., 2020). When the formal mechanisms are underdeveloped and with weak enforcement, informal institutions often exert stronger influence on managerial behavior, accounting practices and perceptions of accountability (Cao, 2023). Understanding this interplay is critical to interpreting both the evolution of the profession, the effectiveness of regulatory and sustainability initiatives and the overall Indonesian accounting landscape (Kristanto and Cao, 2024).
Existing literature (e.g. Kristanto and Cao, 2024) maps these institutional complexities and provide insights into this special context. Kristanto and Cao (2024) synthesized two decades of research and identified themes such as the influence of political connections, two-tier board structures, weak professional infrastructures and pervasive cultural and religious norms. This research also advances understanding how formal and informal institutional mechanisms can address major social, environmental and economic challenges through accounting and accountability.
Building on these insights, this special issue highlights several key themes and research directions that reflect the evolving accounting landscape in Indonesia, including:
formal institutional factors influencing accounting research and practices, including corporate governance structures, legal frameworks, auditing standards and regulatory compliance;
informal institutional factors, including cultural norms, religious values, social expectations and political networks, which shape ethical decision-making, reporting behaviors and accountability;
evolving and adapting accounting professions, focusing on digital transformation, technological advancements, green innovation and the skills and competencies required for future accounting professionals;
accounting’s role in addressing societal, environmental and economic challenges, including gender equality, climate action, pollution mitigation, poverty alleviation and inclusive economic growth; and
challenges in accounting education and professional development, emphasizing sustainability integration, interdisciplinary learning and preparing professionals for emerging societal and environmental challenges.
This special issue reinforces Pacific Accounting Review’s commitment to serving as a leading outlet for high-quality research from Indonesia and the broader ASEAN region. These themes collectively demonstrate how accounting research and practices in Indonesia are shaped by the interplay between formal and informal institutions, governance structures, sustainability pressures and education. They provide a foundation for interpreting the contributions of the eight papers included in this special issue, which advance both theory and practice in a dynamic emerging economy.
The first paper by Restuti et al. (2025), “Political connections, election years and cost stickiness: Evidence from Indonesia,” investigates political connections and election-year effects on management accounting practices. It shows that political connections increase cost stickiness by influencing managerial resource allocation. Election years create uncertainty that prompts firms to release resources and reduce committed costs. This study provides insights in the influence of political institutions and informal networks directly shape managerial accounting decisions such as resource allocation.
The second paper by Ningsih et al. (2025), “CEO auditor background and cost of debt: An empirical study,” examines how CEOs’ professional backgrounds influence financial accounting outcomes. Their findings show that ex-auditor CEOs, particularly those from Big Four and Big Ten firms, are associated with lower costs of debt. This study highlights how professional experience interacts with institutional and governance mechanisms to shape transparency and credibility of accounting practices and the outcomes.
The third and fourth papers focus on sustainability and environmental performance. Suhardjo et al. (2025) in “Sustainability performance and reporting in Indonesian listed companies” adopt a qualitative approach to examine how mandatory sustainability reporting interacts with institutional pressures. They find that regulatory mandates often lead to symbolic compliance, with material sustainability issues addressed primarily in environmentally sensitive sectors. The study highlights the challenges of translating reporting requirements into substantive environmental performance in high-corruption contexts.
Purwoaji et al. (2025) in “The impact of insider CEOs on corporate carbon emissions performance: The moderating role of corporate governance” analyze how insider CEOs affect carbon emissions, moderated by governance quality. Insider CEOs tend to perform poorly on emission metrics unless robust corporate governance mechanisms are in place. This study highlights the critical interaction between leadership continuity, trust and institutional safeguards in environmental performance.
The fifth and sixth papers explore environmental, social and governance (ESG) disclosure. Rahmatulloh et al. (2025) in “CEO career variety and ESG disclosure: Evidence from Indonesia” examine the effects of leadership diversity on ESG reporting. This study show that insider CEOs play a critical role in reducing carbon emissions, particularly under strong governance conditions. This suggests the importance of leadership selection in fostering ESG accountability.
Dwija Putri et al. (2025) in “Institutional dynamics and environmental disclosures: Insights from Indonesia’s energy sector” investigate how coercive, mimetic and normative pressures shape environmental disclosures. This study demonstrates the symbolic–substantive dichotomy under institutional influences.
The seventh paper by Hamsyi et al. (2025), “The combined impact of ESG and Sharia compliance in mitigating stock price crash risk,” investigates the joint effect of ESG performance and Sharia compliance on financial risk mitigation. Their results suggest that ESG alone does not reduce stock price crash risk, but when coupled with Sharia compliance, the combination provides a protective effect. This highlights the value of integrating ethical and religious norms into corporate governance and sustainability frameworks in Indonesia.
Finally, Latifah and Ivada (2025) in “Preparing Indonesian accountants for sustainability challenges: Insights from accounting educators” focus on the role of education in shaping the future profession. Their study indicates that accounting educators view sustainability as a strategic imperative, advocating for integrated curricula, interdisciplinary learning and innovative pedagogical approaches to equip future professionals with the knowledge and skills needed for addressing sustainability challenges.
These eight studies collectively illustrate that accounting in Indonesia is shaped by the interaction of formal and informal institutions, governance structures, sustainability pressures and educational practices. They demonstrate that governance mechanisms, leadership characteristics, culture and religion norms and education systems all play critical roles in advancing transparency, sustainability and professional accountability. Situating accounting practices within Indonesia’s unique institutional environment, these studies provide possible pathways toward more transparent, responsible and sustainable practices.
As Indonesia faces increasing pressure in economic growth, environmental responsibility and social equity, the accounting profession plays a critical role in supporting institutional reform and sustainable development. The studies in this special issue show the importance of diverse research grounded in local context, theory informed and based on multiple methodologies. The implications about accounting practices and research from this special issue could extend to other emerging economies worldwide facing similar institutional challenges.
