Abstract
PurposeEuropean countries are likely to increasingly adopt integrated reporting (IR) voluntarily, after the 2014/95/EU Directive is revised and other initiatives are implemented. Therefore, the present study provides insights on the relevance of IR in voluntary contexts by exploring analysts' reactions to the release of integrated reports in diverse institutional settings.Design/methodology/approachDrawing on voluntary disclosure theory, a quantitative empirical research method is used to explore the moderating role of country-level institutional characteristics on the associations between voluntary IR release and analyst forecast accuracy and dispersion.FindingsIR informativeness is not uniform in the voluntary context and institutional settings play a moderating role. IR release is associated with increased consensus among analyst forecasts. However, in countries with weak institutional enforcement, a reverse association is detected, indicating that analysts rely largely on IR where the institutional setting strongly protects investors. Although a strong institutional setting boosts the IR release usefulness in terms of accuracy, it creates noise in analyst consensus.Research limitations/implicationsAcademics can appreciate the usefulness of voluntary IR across the institutional enforcement contexts.Practical implicationsManagers can use these findings to understand opportunities offered by IR voluntary release. The study recommends that policymakers, standard setters and regulators strengthen the institutional enforcement of sustainability disclosure.Originality/valueThis study is a unique contribution to recent calls for research on the effects of nonfinancial disclosure regulation and on IR “impacts”. It shows on the international scale that IR usefulness for analysts is moderated by institutional patterns, not country-level institutional characteristics.
Highlights
At the international level, regulators and standard setters are increasingly engaged with initiatives in the nonfinancial or sustainability reporting field – for instance, the IFRS Foundation released the “Consultation Paper on Sustainability Reporting” in September 2020
The few studies that focus on contexts where integrated reporting (IR) is voluntarily released offer mixed results (Kim et al, 2017; Flores et al, 2019; Wahl et al, 2020). Because these contexts are not homogeneous in terms of country-level institutional characteristics, we explore the association between IR release and analyst forecasts by considering the moderating role of these characteristics
Whereas the standalone corporate social responsibility (CSR) report is associated negatively with the forecast accuracy, the IR release is significantly associated with the forecast accuracy, indicating the IR incrementally increases informativeness compared with the standalone CSR report
Summary
Regulators and standard setters are increasingly engaged with initiatives in the nonfinancial or sustainability reporting field – for instance, the IFRS Foundation released the “Consultation Paper on Sustainability Reporting” in September 2020. This paper marks the tentative entry of the IFRS Foundation, which is traditionally. © Francesca Rossignoli, Riccardo Stacchezzini and Alessandro Lai. Published by Emerald Publishing Limited. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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