Abstract
The recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.
Highlights
Integrated reporting makes both the financial and non-financial information accessible to the company stakeholders, whilst it focuses on the future prospects of the company (Bernardi & Stark, 2018; Cohen et al, 2012)
South African banksessed the integrated reporting based on market ing sector was largely insulated from the globcapitalization and lumping companies from dif- al financial crisis (Erasmus & Makina, 2014), ferent sectors together, the current study focuses the sector remains an important player in the on banking sector
In line with duction of integrated reporting (2010 to 2014). For this train of thought, the objective of this study is to the period prior to the introduction of integrated establish whether a statistically significant relation- reporting, only the financial statements were used ship exists between the quality of integrated reports to obtain the information on financial perforof the banks listed on the Johannesburg Stock Exchange (JSE) and their financial mance through IRESS financial database
Summary
Integrated reporting makes both the financial and non-financial information accessible to the company stakeholders, whilst it focuses on the future prospects of the company (Bernardi & Stark, 2018; Cohen et al, 2012). It is “a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term” (IIRC, 2013). There is limited knowledge on whether such an improvement has occurred because of the mandatory requirements in publishing integrated reports This is because most studies only looked at the financial performance post the introduction of integrated reporting, largely in jurisdictions where it is not mandatory to issue integrated reports.
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