Integrated Reporting Practices in Europe and Value Relevance of Accounting Information under the Framework of IIRC

Salvatore Loprevite,Daniela Rupo,Bruno Ricca

doi:10.5539/ijbm.v13n5p1

Salvatore Loprevite, Daniela Rupo + Show 1 more

Open Access

https://doi.org/10.5539/ijbm.v13n5p1

Copy DOI

Abstract

The research has been conducted on a sample of European companies with the aim to investigate whether the adoption of the Integrated Reporting (IR) affects the value relevance of summary accounting information. The relations between Market Value (MV) and traditional accounting information (Book Value and Earnings) are studied by a linear price-level model, typical of the studies on the value relevance of accounting information. The results of analysis show that the degree of value relevance of Earnings is significantly different for companies that publish an Integrated Report compared to companies adopting traditional financial reporting. The study confirms the assessment made by IIRC and the other advocates: Integrated Reporting is expected to improve the quality of traditional accounting information for providers of financial capital.

Highlights

We point out that the model could determine whether a systematic difference in the valuation of Earnings (E) and Book Value (BV) by investors exists for the two groups of companies, essentially by the interaction between the coefficients β for these independent variables and ir_rep
While the EU and the member States' legislators are working and interacting each other on the issue of non-financial information, the number of companies voluntarily adopting integrated reporting is growing steadily all over Europe and the International Integrated Reporting Council (IIRC) Framework is extending its influence in this field
Our study moves in this research field with the aim to contribute to understanding the relation between the publication of an Integrated Report (IR) and the value relevance of summary accounting information

Summary

Introduction

The relation between the publication of an Integrated Report (IR) and the value relevance of traditional accounting information represents an important emerging research stream, considered in literature as a field that deserves to be further investigated through empirical studies (Cheng, Green, Conradie, Konishi, & Romi, 2014; de Villiers, Rinaldi &, Unerman, 2014; Morros, 2016; Cuozzo, Dumay, Palmaccio, & Lombardi, 2017). For the International Framework the adoption of an IR approach «aims to improve the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital» The literature interpreted this aim as an expectation of the IIRC Framework towards an increase of value relevance of accounting information by the adoption of an Integrated Reporting approach (Baboukardos & Rimmel, 2016). The paper is an initial extent of our previous research (2017) that, to the best of our knowledge, represents the first attempt to verify the effects of the integrated reporting approach under the IRR Framework on a sample of companies covering to the whole of Europe

Objectives

Results

Conclusion