Is integrated reporting more value relevant in North America?

Purpose of the article: Management has traditionally used financial information for strategic decision-making. This study investigates the value relevance of financial information contained in earnings per share and operating cash flow per share for strategic decision-making and hence performance. It utilized secondary data extracted from annual reports and accounts of fortythree (43) listed firms on the Nigerian Stock Exchange over the period of 2006–2017. Methodology/methods: The collected data were subjected to analysis using the non-linear symmetric Generalized Autoregressive Conditional Heteroscedasticity (GARCH (1 1)) model, which is capable of handling time varying properties of financial time series to measure the statistical significance of the association between the variables of interest. Scientific aim: The paper is aimed at empirically investigating the value relevance of financial information to ascertain its potency for handling strategic decisions of listed firms in Nigeria. This is to digress from the contextual factors in the decision-making process and construct an integrated link between value relevance research and strategic management. Findings: The study found that earnings per share and operating cash flow per share are individually and jointly value relevant in strategic decisions and performance. Conclusion: It is necessary to pay attention to the financial information system of an organization to enhance the quality of services it can provide to strategic management. It is necessary to pursue the fundamental quality of relevance that guarantees predictive, materiality and confirmatory values and enhancing quality that measures usefulness by both management and regulators.


 
 
 
 Purpose: This study investigates the value relevance of financial information i.e., earnings (EPS), the book value of equity (BVE), and cash flow from operations (CFO). The study further investigates the influence of real EPS management (REM) on the value relevance of financial information because firms are now switching toward real earnings management rather than accrual-based earnings management (ABEM).
 Methodology: A sample of 250 public listed companies was used to test the hypotheses over the period 2014-2018. Using Driscoll-Kraay regression.
 Findings: This study finds that earnings, the book value of equity, and cash flow from operations are value relevant, and real earnings management moderates the value relevance of EPS, book value of equity, and cash flow from operations.
 Implications: This study has specific policy implications for regulators to push auditors to detect real earnings management to improve the value relevance of financial information.
 
 
 

The purpose of this article is to analyse the literature concerning legal framework for outer space activities by states. Review was conducted on the elements of national space law, including literature critiquing particular strengths or weaknesses of existing laws and literature, on the obligations placed on States under international law and on why writers make particular recommendations as to the content of legislation. The article will summarise the key elements one would anticipate finding in the outer space regulatory framework and which will form the structure of the analytical framework when considering how States implement international space law in practice. In recent times, the issue of earnings management and value relevance has caused financial reports to come under scrutiny. With the introduction of the International Financial Reporting Standards (IFRS), a lot of studies have been carried out to see what kind of effect it has on key financial variables such as earnings management and value relevance of firms. Therefore, this study, “Earnings Management and Value Relevance in Nigeria: A Pre and Post IFRS Analysis”, examined the impact of IFRS on Earnings Management and Value Relevance of financial information in Non-Financial Companies quoted in the Nigerian Stock Exchange (NSE). Data gathered are from the financial statements and annual reports of 60 Companies from the Non-Financial Sector of the Nigeria Stock Exchange because companies in the financial sector are not overall amendable to accruals model. The empirical study covered the period from 2007 to 2016 statistical and econometric tools such as Panel data regression and paired samples tests. The results revealed an increase in value relevance, and a decrease in earnings management in the Post-IFRS era. Thus, we infer that earnings management level has decreased while value relevance has increased since IFRS adoption. This study therefore recommends that the relevant regulatory bodies should be empowered by the government to enable the formulation of effective measures and policies that check earnings management practices, and foster value relevance of the financial information presented in the annual reports and accounts of Nigerian companies.

Purpose Analyzing the impact of integrated reporting (IR) on international firms' value relevance, considering diverse information such as income, cash flows, risks, uncertainties and various capitals. Design/methodology/approach This paper used a sample of 300 international companies between 2010 and 2019. This paper collected the data from the Thomson Reuters Eikon database. Quantitative methods were used to test the hypotheses. Furthermore, the feasible generalized least squares (FGLS) method was performed to test the hypotheses. Findings The results suggest that IR and value relevance positively correlate, confirming the hypothesis. Moreover, this paper verified these results by conducting robustness tests on the contribution of the framework and guidelines prepared by the International Integrated Reporting Council (IIRC) in 2013. Practical implications This study enables users to evaluate company transparency and the relevance of disclosed nonfinancial information, providing valuable insights for report preparers and investors seeking profitable opportunities. Originality/value The interest in this research was motivated by the authors’ research field, which is innovative, as few studies have been conducted to explain the relationship between IR and value relevance. Similarly, this paper incorporated into their analysis the importance of the framework created by the IIRC in 2013 in preparing and presenting an integrated report. This paper considered the contribution of this framework to the creation of information content. This design has been overlooked in previous studies. However, this paper mobilized the FGLS method, which has been little used in previous studies.

The International Integrated Reporting Council: A story of failure

PurposeThis study sought to evaluate the relationship between value relevance of financial information and conditional conservatism of non-financial companies listed in China.Design/methodology/approachUsing panel data comprising of 28,723 firm years, the authors determine the value relevance of financial information before and after mandatory International Financial Reporting Standards (IFRS) adoption while incorporating the relationship with conditional conservatism. The authors further examined how this relationship varies between state and non-state owned companies.FindingsConditional conservatism is positively (negatively) related to value relevance prior (post) to mandatory IFRS adoption while it makes no difference as to whether a company is state or non-state owned, as IFRS has a positive and significant effect on value relevance. Conservatism, on the other hand, has a negative and insignificant relationship with market value of both state and non-state owned firms during the pre- and post-IFRS period.Originality/valueBy exploring an emerging economy, the authors provide evidence on the variations in value relevance amongst state and non-state owned firms. In particular, the authors establish the positive effect of IFRS on the value relevance of non-state firms as compared to state-owned institutions.

The International Integrated Reporting Council (IIRC) and Global Reporting Initiative (GRI) have concurrently issued guidelines for an alternative to current corporate reporting. The former issued International Integrated Reporting Framework, while the latter Sustainability Reporting Guidelines ver.4. As some commentators pointed out, the IIRC shifted its emphasis from sustainability-related information, which it shared with GRI, to investor-oriented information. Did GRI and IIRC plan to bifurcate their roles? If so, how did they do that? This paper aims to answer these questions with a focus on organizational structures, based on the strategy-structure–performance paradigm of organizational theory. Thus, shedding light on the differences in organizational structure can reveal the direction in which an organization is headed, as well as the strategies they would implement. Based on the results of organizational structure analysis and network theory, while GRI formed a network open to various stakeholders for creating new sustainability reporting practices, IIRC built a network that was dominated by financial stakeholders to apply the GRI guideline to investor-oriented guideline, in accordance with IIRC’s main purpose.

International Financial Reporting Standards (IFRS) was first adopted in 2005 by European Union countries while Nigeria mandatorily adopted in 2012 to participate in opportunities offered by globalization. This study, therefore, investigated the impact of IFRS adoption on the value relevance of financial information of quoted Healthcare Firms in Nigeria. The study conducted a pre (2008-2011) and post (2012-2015) IFRS analyses on six Healthcare firms quoted on the Nigeria Stock Exchange. The study sourced data on Earnings per Share (EPS), Change in Earnings per Share (CEPS), Book Value per Share (BVPS) and Share Price (SP) from published annual reports of the quoted Healthcare firms and Cashcraft Asset Management. Using the Multiple regression model the study revealed that Pre- IFRS financial information is value relevant; Post-IFRS financial information is also value relevant; and Post-IFRS financial information has relative value relevance over Pre- IFRS financial information.

Research aims: This paper aims to investigate whether voluntary disclosure of integrated reports (IR) with the International Integrated Reporting Council (IIRC) framework influences value relevance in Indonesia.Design/Methodology/Approach: The data covered the period 2017-2022 of all manufacturing companies in Indonesia listed on the Indonesia Stock Exchange (IDX). The total sample of this study was 606 firm-year observations. An IR Score was developed using the International IR Framework 2013, and content analysis was performed to measure IR adoption and practice. This study employed multiple linear regression to test the hypothesis. The authors also used two models: the Pricing Model for testing the main result and the Ohlson Model for testing robustness. Research findings: The result claims that the IR score yielded a positive and statistically significant effect on the value relevance of the company. In other words, companies with higher IR scores will also have a higher value relevance.Theoretical contribution/ Originality: First, this study contributes to the literature in accounting, stating that companies that adopt the IR framework can increase the value relevance. Second, by using different models to test the hypothesis, the results of this paper exhibit a consistent relationship.Practitioner/Policy implication: The study's findings help regulators develop new regulations.Research limitation/Implication: This research could only be generalized to Indonesian manufacturing companies. In addition, a significant number of Indonesian manufacturing companies continue to fail to submit integrated reports.

PurposeThe purpose of the study is to explain why there is a conflict in the meaningfulness of integrated reporting (IR) between International Integrated Reporting Council (IIRC) and analysts and institutional investors using framing theory and suggest a way forward for a meaningful IR to analysts and institutional investors.Design/methodology/approachThe study used qualitative research design in which data was collected from IIRC's document and 21 semi-structured interviews of analysts and fund managers conducted between 2014 and 2015 after the introduction of IIRC framework. This period coincided with prior studies that provide conflicting evidence over the meaningfulness of IR between IIRC and analysts and fund managers.FindingsThe findings show that the IIRC from inception uses a preparer-centred frame where it predominantly interprets IR as meaningful from the perspective of preparers of information under ideal conditions, and as such also meaningful to fund managers and analysts. On the other hand, the fund managers and analysts from the onset use a user-centred frame where they interpret IR as not meaningful from their perspective as users of the information under pragmatic conditions. The context making it difficult to reconcile the differentiated frames are the timeframe; absence of trust relationship and balance in reporting.Research limitations/implicationsThe study is limited by its qualitative nature meaning that generalisation of findings may not apply. Its data is also limited to IIRC IR Framework, analysts and fund managers as opposed to wider stakeholders.Practical implicationsThe practical implication of the findings suggests that if IR is to be made meaningful to analysts and fund managers, the promoters must reconcile the differentiations in frames employed by both the IIRC, analysts and institutional investors. Without this reconciliation IR may not serve the information needs of the intended primary users.Originality/valueThe study uses framing theory to show that time frame, emotional connectedness and data financialisation are attributes that make IR to be considered meaningful to analysts and fund managers. In addition, it provides insight into how the use of organisational and market context influences the framing of the meaningfulness of IR.

The objective of this paper is to test the impact of the accounting reform on the value relevance of financial information in the Tunisian Stock Exchange (TSE). Specifically, the study examines whether the market's valuation of earnings and book values improve investors' decisions after the implementation of the accounting reform. Using a sample of Tunisian firms traded on the Tunisian Stock Exchange during the period 1992-2001, we investigate the relation between the firms' stock prices and their book values, earnings, and cash flows before and after the accounting reform. Our results show that earnings, cash flows and book values are positively and significantly related to security prices. In addition, we find that the value relevance of these variables have significantly improved after the 1997 accounting reform, even after controlling for the effect of scale factor in our price model. Finally, we find that some factors supposed to impact on the value relevance in Tunisia such as firm size and branch of activity, have no incidence on the improvement of value relevance in Tunisia following the accounting reform.

PurposeThis research is motivated by the development of dialogue and debate regarding company reporting in the form of sustainability reporting (SR) – which is separate from the annual report (AR) – or integrated reporting (IR). Research into SR and IR is still fascinating, and this study addresses the debate about them. This study aims to examine which of the two reports is more valuable for investors, and also examine whether IR has value relevance because the information in the IR could reinforce the importance of the accounting information.Design/methodology/approachAs with previous studies, we adopted a valuation approach – the Ohlson model – to assess the value relevance of non-financial information (in the form of SR/IR) and financial information. As a preliminary study, we used non-financial information as a binary variable, i.e. a group of companies that issue sustainability reports and a group of companies that issue integrated reports. Therefore, they complement and interact with the financial statements’ information. This paper used panel data consisting of 931 firm-years of SR issuers and 922 firm-years of IR issuers in Europe and Africa in the period from 2005 to 2019.FindingsThe results showed that SR had a higher value relevance than IR. However, when the authors interact the corporate reporting form with the accounting information, IR had value relevance because the information contained in the IR could reinforce the importance of the accounting information.Practical implicationsThis study will support regulators in various countries to monitor the reporting practices of companies in those countries. The results of this study provide evidence that sustainability reports get a higher response than integrated reports. However, when interacted with the accounting variables, information in the IR is considered to be more relevant than that found in the SR. Therefore, it is hoped that the results of this study will help the International Integrated Reporting Council (IIRC) in reviewing IR practices around the world so that the implementation of IR practices can be realized in accordance with the mission that the IIRC wants to achieve.Originality/valueResearch into the value relevance of SR and IR has been carried out by several previous researchers separately, but to the best of the author’s knowledge, there are no studies comparing the value relevance of the two.

In recent years, the level of interest in non-financial disclosure has increased considerably, stimulating the development of new frameworks, such as the one proposed by the International Integrated Reporting Council (IIRC) on integrated reporting (IR), and an extension of the existing standards, such as the Global Reporting Initiative (GRI). In particular, IR aims to combine the different dimensions of financial and non-financial performance and consider all types of capital related to value-creation processes. In this context, intangible resources represent a relevant issue in the new economic era of knowledge and information. In fact, intangibles, often called intellectual capital, are considered key drivers that bring future benefits, and they are a determining factor in achieving a competitive advantage. From this perspective, the chapter analyzes the role of disclosure on intangible assets in reducing information asymmetry, increasing the level of transparency and accountability toward stakeholders, and positively influencing corporate performance. Furthermore, this work provides an overview of how the IIRC and the GRI deal with the topic of intangibles disclosure within non-financial reporting.KeywordsIntangible assetsInternational standardsIIRCGRIDisclosureNon-financial reporting

A journey towards a safe harbour: The rhetorical process of the International Integrated Reporting Council

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify; mso-pagination: none;" class="MsoNormal"><span style="color: black; font-size: 10pt; mso-themecolor: text1;"><span style="font-family: Times New Roman;">This study examines whether the components of accounting conservatism as described in Watts (2003a): contracting, litigation, regulation, and taxation, provide insight on the value relevance of financial information. During the years 1993 through 2009, we explore whether these four factors are value relevant in capturing information in contemporaneous stock returns and prices and whether the trends in value relevance for these drivers vary across time. Specifically, our study aids in helping to reconcile the competing results of Balachandran and Mohanram (2011), who state that there is no compelling evidence that firms with higher levels of accounting conservatism exhibit decreasing levels of value relevance, and Lev and Zarowin (1999), who suggest that accounting conservatism is a factor causing a decline in the usefulness of financial information over time. Our results provide evidence that the level of contracting, litigation, and regulation are associated with returns and prices and their value relevance has not decreased over time, findings which differ from Lev and Zarowin (1999), and support Balachandran and Mohanram (2011), such that the expectation of these drivers are associated with value relevance. In addition, we find less consistent evidence that the taxation explanation of accounting conservatism is associated with value relevance. </span></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>