Abstract
Integrated reporting is a developing reporting aspect in order to assess problems relating to corporate reporting. It provides a comprehensive account of organizational worth. This paper aims to assess whether integrated reporting and organizational capital increase the value relevance of firms. A checklist containing 100 integrated reports of banks which are listed in Colombo stock exchange were used for the analysis. Data were collected over the period from 2010 to 2019. Statistical analysis was done using the EWIS. Finding reveals that the book value of equity, earnings before interest and taxation of the equity of the bank, leverage of the bank and Organizational capital have a direct effect on the market value of equity of the bank while return on equity and size does not have a positive impact on the market value of equity of the bank. And to the best of our knowledge, it reveals that there is a significant effect of integrated reporting on the value relevance of organizations. Future research avenues were identified and the suggestions for future research on integrated reporting were provided. The findings bring out different implications for managers, decision-makers and the research community as well. This study further expands the existing knowledge on integrated reporting and sets the foundation for future researchers.
Highlights
The development of integrated reporting (IR) has attracted much interest from various potential users of the report in the company recently
The results reveal significant relationships between BVS (β = -25.426, p < 0.05), EPS (β = 179.225, p < 0.05), leverage of the bank (LEV) (β = -115.424, p < 0.05), Organizational Capital (OC) (β = 3.684, p < 0.05), return on equity (ROE) (β = -8354.237, P > 0.05), SIZE (β= -900.822, P > 0.05)
The results do not show a significant path between MVS and ROE as well as MVS and SIZE H5 and H6 are not supported in the model
Summary
The development of integrated reporting (IR) has attracted much interest from various potential users of the report in the company recently. The guideline drawn up by the International Integrated Reporting Council (IIRC) asserts that the Integrated Reporting offers companies the opportunity for a clear and concise, integrated presentation of their business. IR consists of key concepts, guidelines and content, which shows how corporate strategy, administration, results and prospects contribute to the short-term, medium and long-term value creation of companies (IIRC 2013). IR can not alone contribute to generate the value of the firm without the greater deal of the Organizational Capital (OC). Integrated Reporting and Organizational Capital must be overlooked as an interrelated tool that contributes on the value creation of the firm. The IIRC framework classifies the following six types of capital in order to increase financial performance
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