Abstract
Integrated Reporting (IR) is a relatively new concept that is considered one of the most recent trends in corporate reporting; it is still an emerging research area in different parts of the world. Malaysia is an appropriate emerging economy to investigate IR adoption. Large Malaysian public listed companies (PLCs) are encouraged by the Malaysian Code on Corporate Governance (MCCG) of 2017 to adopt IR based on the international IR framework. By combining the stakeholder theory and the agency theory, this article proposes a conceptual framework to explore the moderating effect of sustainability reporting on the relationship between corporate governance mechanisms and IR disclosure level for the Malaysian PLCs. To obtain the data related to IR and the other variables, the study suggests using a content analysis method on the annual reports of the top 100 Malaysian PLCs based on their market capitalization. The proposed conceptual framework could be very useful; it can assist PLCs having sustainability practices to adopt the IR framework, reduce information asymmetries, increase information transparency, and create value. This study contributes to the literature by investigating the IR practices and their determinants in Malaysia after the introduction of MCCG 2017.
Highlights
The external business environment has significantly changed and has become more complex, while traditional corporate financial reporting is unable to face these changes due to its several limitations and drawbacks, such as absence of nonfinancial information, short-termism, lack of coherence, and complexity (Haji & Ghazali, 2013; Silvestri et al, 2017)
According to the International Integrated Reporting Council (IIRC) database, more than 1,600 organizations in more than 70 countries globally depend on the International Integrated Reporting Framework (IIRF) to support their strategy and reporting process (IIRC, 2019); this is a meaningful step in building significant momentum toward global IR adoption
Motivated by the research gap found in the prior IR-related studies in Malaysia, the present study aims to contribute to IR literature and respond to several calls for research on IR implementation (Dumay et al, 2016; GarcíaSánchez & Noguera-Gámez, 2018; Haji & Anifowose, 2016b; Pistoni et al, 2018) in three ways: first, it investigates IR disclosure in its earliest application stage in Malaysia; second, this study provides a conceptual framework that examines the impact of the Malaysian Code on Corporate Governance (MCCG) 2017 call, board of directors, and sustainability reporting (SR) on the IR disclosure level; and, it conceptualizes the moderating effect of SR on the relationship between Corporate governance (CG) and IR
Summary
The external business environment has significantly changed and has become more complex, while traditional corporate financial reporting is unable to face these changes due to its several limitations and drawbacks, such as absence of nonfinancial information (e.g., social, health, carbon emissions, and labor rights), short-termism, lack of coherence, and complexity (Haji & Ghazali, 2013; Silvestri et al, 2017). To overcome these limitations, Integrated Reporting (IR) has gained significant attention in recent years as an emerging approach to corporate communication (Camodeca et al, 2018). IR has recently attracted the attention of many academics and practitioners as the evolution of corporate
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