Influence of integrated reporting ratings, CEO age, and years of experience on the share price of top 106 JSE listed companies

Patient Rambe,Tonderayi B Mangara

doi:10.21511/ppm.14(3-1).2016.08

Abstract

Integrated corporate reporting (ICR), which entails the process of compiling, documenting and reporting on company’s resources, its ongoing relationships with key stakeholders; business models; products (services); and the impact of such products (or services) on stakeholders, society, as well as the environment to optimize company value, has generated considerable interest among top 100 Johannesburg Stock Exchange (JSE) listed companies in South Africa over the last decade. Despite the surging interest in ICR to leverage the social responsibility, transparency and public accountability of companies in the developing African countries, little is known about the combined influence of ICR and internal company resources and/ capabilities (e.g., age and experience of the Chief Executive Officer (CEO)) on the performance of South African listed companies. The main objective of this study, therefore, is to examine the impact of Integrated Reporting Ratings (IRR); the company CEO’s age; and his/her years as a CEO on the share price of the company within the South African context. The top-106 JSE listed companies for the period Year-end 2014 constitute the sample for this study. Multivariate non-parametric regression is used to model the relationship between the predictor (i.e., independent) variables and the response (i.e., dependent) variable using MATLAB. The model developed in this study is, then, used to evaluate the impact of IRR; the CEO’s age and years of experience as CEO on the share price of individual companies. The proposed methodology is illustrated step-by-step. The finding of the study reveal that the share price of a company tended to increase with an increase in IRR, age and years of experience of the CEO, demonstrating that a company’s established history in integrated reporting and corporate experience positively impact its performance (i.e., the share price). Keywords: integrated corporate reporting, corporate responsibility, JSE listed companies, MATLAB. JEL Classification: G17

Highlights

Integrated corporate reporting (ICR), which describes transcending stand-alone social, environmental, social responsibility and sustainability reporting to achieve an integration of sustainability and governance information within the same annual report (The Association of Chartered Certified Accountants, 2012), has gained considerable ground in the South African corporate reporting landscape owing to the intractable connection between the business operations, accountability to the stakeholders and broader communities affected by company operations
The normal probability plot of Chief Executive Officer (CEO) age for top-106 regression analysis, but rather non-parametric Johannesburg Stock Exchange (JSE) listed companies demonstrates that the data are regression analysis should be used to determine the not normal
We argued that the studies on ICR-firm performance, CEO age-firm performance, CEO’s years of experience-firm performance tends to be distinct and run parallel to each other

Summary

Introduction

Integrated corporate reporting (ICR), which describes transcending stand-alone social, environmental, social responsibility and sustainability reporting to achieve an integration of sustainability and governance information within the same annual report (The Association of Chartered Certified Accountants, 2012), has gained considerable ground in the South African corporate reporting landscape owing to the intractable connection between the business operations, accountability to the stakeholders and broader communities affected by company operations. Patient Rambe, Department of Business Support Studies, Central University of Technology, South Africa.

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