Value Relevance of Integrated Reporting Using a Novel Approach: Evidence from South Africa

Abstract

This paper examines the value relevance of accounting information under integrated reporting (IR) in the setting of South Africa’s Johannesburg Stock Exchange. Multiplicative log-linear models are used in measurement which is a novel technique that mitigates the shortcomings of traditional value relevance models. The findings show that value relevance of summary accounting information increases in the post IR period. The results are similar for both financial and non-financial firms and for higher quality reports. Compared to traditional models, the multiplicative model provides estimates that are more stable over time and shows better explanatory power. Overall, the findings show that there is positive association between integrated reporting and value relevance of accounting information which is suggestive of the fact that capital providers value the information content of IR.