Integrated Reporting Research Articles

What does the Business Model tell us about Natural Capital? Insights from African Integrated Reports

The economics of ecosystems and biodiversity (TEEB, 2010) has emphasized the importance of business sectors involved in ecology, biodiversity, and the environ-ment's entire conservation and protection process. Corporate sustainability raises the question of how environmental and social management can be better integrat-ed into economic business goals. The latter is important in order to trace the actual impact of firms' actions on the environment by means of disclosure reports and in order to identify and promote business organizations' virtuous behaviour. We investigate the type of information provided on natural capital and its posi-tioning within the integrated report (IR) body (the locus). This element is critical in order to understand whether the information provided is effective and, if so, whether it is likely to be translated into actions that impact the environment tangi-bly. We undertook an empirical analysis of the IR corpus's disclosure of natural capi-tal in order to trace whether and, if so, how natural capital information is embod-ied in business activities, notably in IR's business model (BM) section. We did so by investigating South African IR a very promising research domain, due to the environmental wealth and the Johannesburg Stock Exchange regulation that mandates listed companies to provide an IR. Our study sheds lights on real commitment to sustainability, discussing the type of information that the companies provide and its link to strategy implementation.

A systematic literature review on integrated reporting from 2011 to 2020

PurposeThis study aims to furnish the systematic literature review on integrated reporting (IR) and answer three research questions: How has the IR concept been developed recently across the different countries? How can the literature of IR be allocated among different focus areas/themes? What are the future opportunities available for IR?Design/methodology/approachThe methodology involves selection, classification and categorization of 110 articles on IR into their focus areas, journals, time distribution, continent-wise distribution, research methodologies and keywords analysis.FindingsThe findings of the study suggest that there is a need of the following: increasing the case studies and empirical research in developing assurance models, analysis of the perception of shareholders in Asian countries, harmonization of financial and non-financial standards, research on the IR of non-listed companies.Practical implicationsIt provides insights to practitioners regarding the challenges faced by the economies and internal organization. It might help researchers and academics to focus on developments of IR in different countries. It might also help regulators to develop some policies, models and frameworks for its future implementation.Originality/valueIt furnishes the outline of 110 articles published in eminent journals from the year 2011 to beginning of 2020.

The reporting of sustainable development goals: is the integrated approach the missing link?

This commentary argues that the integrated thinking could support the simultaneous consideration of different stakeholders' groups to ensure that the SDGs can be achieved as a whole. Prior research, indeed, has argued that social and environmental accounting should put forward actions against unsustainability. Recent literature and international bodies report action to mitigate the negative impacts of unsustainability globally, such as the introduction of the 17 Sustainable Development Goals (SDGs) to set an agenda for the implementation of sustainable development. The implementation of the SDGs has not thus far resulted in the expected outcomes, since there is a lack of focus on how to identify interdependencies among different goals. Integration in SDGs has emerged as an approach to promote actions in this regard, but only a limited number of studies have put forward how integrated reporting and thinking can support the implementation of actions and the monitoring of their progress. Therefore, a paradigm shift in the implementation of an integrated approach in monitoring sustainable development worldwide should be promoted. This could have economic, financial and business consequences; for instance, to support national development plans by creating national financing frameworks, to improve internal decision making and information for investors, to effectively engage the public in sustainability practices such as a Green New Deal and to enhance the perspective of both public and private sector. The adoption of integrated reporting (IR) can describe the value creation process of an organization, by considering the influence of the external environment, relationships, and various resources. By including the concept of sustainable development, the revised IR Framework can be translated at various levels of analysis, by helping firms, local authorities, countries, or other stakeholders in developing proper strategies to improve their process of sustainable development creation. Areas for fruitful future research can be addressed to identify those interdependencies among goals that could effectively enable the SDGs to be universal, indivisible, and interlinked. A further call for research could be focused on what interconnections in the SDGs could be developed across sectors, societal actors, and between and among low, medium, and high-income countries.

Integrated thinking and sustainability reporting assurance: International evidence

AbstractRecently, there has been increasing demand by stakeholders for firms to demonstrate how they create value within the context of their operating environment. Consequently, a new reporting approach, integrated reporting (IR), was conceptualised with its development linked to the firm's integrated thinking (IT). Yet very little is known about the effects of IT on firms' reporting decisions. Hence, we investigate whether IT influences firms' decision to publish an assured sustainability report. Using an international dataset, we find that IT is positively associated with sustainability reporting assurance. We also find that this association is moderated by the type of legal system such that for firms in code law countries, the IT effects are reduced. Nevertheless, the effects of IT remain strong, indicating that IT is important for reporting decisions regardless of the firm's contextual setting. These findings have implications for policymakers and organisations interested in promoting high‐quality sustainability reporting.

The Factors of Integrated Reporting Quality: A Meta-Analysis

The research on integrated reporting (IR) grew exponentially during the last decade. The present meta-analysis was motivated by the need to systematize the results of previously published studies employing quantitative methodologies. Therefore, we fill a research gap by discovering significant meta-analytic relations between IR and various economic, organizational, institutional, and country-level variables. Three major areas of research were identified: IR adoption, IR quality, and integrated thinking. The final sample consisted of 91 articles published in top journals between 2013 and 2021. The meta-analytic procedures were applied on bivariate and partial correlations between the three major areas of IR and other constructs such as company attributes, financial performance, corporate governance, social and environmental responsibility, market performance, industry- and country-level characteristics. The results confirmed that corporate governance variables (i.e., director independence, board gender diversity, the existence of a social responsibility committee, and quality of the audit committee) were the most important predictors of IR quality, especially in a voluntary reporting setting. On the other hand, financial reporting quality, financial performance, and firm leverage are not significantly associated with integrated reporting quality. Several implications and recommendations were derived from these meta-analytic results.

Integrated reporting and environmental disclosure: Is natural capital neglected?

We have entered a new geologic era, the Anthropocene, also defined as the Age of Humans, in which humans are doubtless responsible for ensuring sustainable development. Further research is required to assess actions carried out by business organizations with reference to environment preservation. Our paper contributes to the academic discussion on the role of integrated reporting with a focus on natural capital. We propose to investigate whether and how companies report about natural capital in their integrated reports (IR), in the domain of South Africa. In our study, we investigate the type of information and its positioning in the IR and, notably, in the business model (BM). Our paper provides many contributions to literature. First, it exposes the extent and type of information that can be provided on natural capital through IR. Moreover, the paper contributes to the debate about the efficacy of IR to really enhance sustainability practises

The role of board diversity on the relationship between corporate governance, human capital and integrated reporting: a systematic literature review approach

The paper aims to analyse the existing literature on the role of board diversity on the relationship between corporate governance, human capital and integrated reporting (IR) by using systematic literature review method. The review protocol guideline which is called PRISMA has been used in the study. The PRISMA has identified the accurate related articles and there were four stages in the systematic review process by using main databases (Scopus and WoS), and also one supporting database (Google Scholar). The analysis was based on a thematic analysis that shaped four subjects; to be specific, board diversity, corporate governance components, human capital, and integrated reporting. These main themes have led the author to come across 13 sub-themes. The study will offer a lot of significant contributions towards the body of knowledge to adhere to better reports using IR since it gives more than a few benefits to the company itself.

The capital market effects of Integrated Reporting (IR): An exploratory analysis of a non-linear relationship

The capital market effects of Integrated Reporting (IR): An exploratory analysis of a non-linear relationship

The Future of Non-Financial Businesses Reporting: Learning from the Covid-19 Pandemic

In this paper we conceptually identify the gap in the literature about lack of business’s awareness in non -financial activities, especially biodiversity, which can be responsible for crisis like COVID-19 which can adversely affect the global economy. We recommend approaches to existing business about how to enhance the quality of reporting by considering non-human element in reporting and making it more comprehensive for the stakeholders. We adopt Actor Network Theory (ANT) and the Natural Inventory Model to support our argument that nature consists of both human and non-human. From our observation about the COVID-19 crisis and by consulting the existing relevant literature on CSR, COVID-19, non-financial reporting and integrated reports (IR), we propose the implication of non-financial reporting by companies based on a theoretical framework. We recommend that companies should implement/adopt Circular Economy concept for sustainable business model and report on biodiversity and extinction accounting in more structured and mandatory way via producing IR to create value on short, medium and long terms. This is the first paper to tackle the COVID-19 crisis and offer solution for future reporting. The findings will add value in the academia and society.

Integrated Reporting Disclosure and Its Implications on Investor Reactions

The purpose of this study is to analyze integrated reporting disclosure and its implications on investor reactions. The population in this study is all manufacturing companies listed on the Indonesia stock exchange from 2017 to 2019, totaling 171 companies, and the sampling technique used is purposive sampling method. The method used in this research is a quantitative description using the financial statements of manufacturing companies listed on the Indonesia stock exchange. The data analysis method used is multiple regression analysis with intervening variables using AMOS 24 software. The results of this study show a positive and significant effect of profitability (X1) and company size (X2) on integrated reporting (IR); a positive and insignificant effect of stakeholder pressure (X3) on integrated reporting (IR); a positive and significant effect of profitability (X1) and stakeholder pressure (X3) on investor reactions (Y); a positive and insignificant effect of firm size (X2) and integrated reporting (IR) on investor reactions (Y). Suggestions are that in further studies, we can increase the sample size by including other industries, and in addition to using annual reporting, we can also use other sources such as websites, press releases, and prospectuses to improve the robustness of this study by relying on other data sources.

Business Partner Roles of Management Accountants Through the Emergence of Sustainability Disclosures

This study explores whether the implementation of sustainability disclosure can trigger or stimulate the change in the roles of management accountants in adopting organizations in Vietnam as business partners. To do so, it explores the roles of management accountants in integrated reporting (IR) adopting organizations and sustainability reporting (SR) adopting organizations based on the use of the pragmatic constructivism (PC) theoretical framework. In addition, qualitative semi-structured interviews were used to provide an in-depth investigation of management accountants' work in both IR and SR adopting organizations. The empirical findings suggest that the adoption of the IR framework has triggered changes in management accountant roles toward the new business partner roles to support the decision-making process within their organizations. On the other hand, management accountants from SR adopting organizations still work as traditional "bean-counter" roles. Our paper concludes by indicating several propositions based on our empirical findings that can be tested by future researchers from the domain by collecting relevant data. Our study can be seen as a response to the recent call for a more in-depth examination of the practice of sustainability disclosure from the practitioners' perspectives in adopting organizations.

Effects of Stakeholder Engagement and Corporate Governance on Integrated Reporting Disclosure

Integrated reporting (IR), one of the latest developments in organizational reporting practices, collates important financial and non-financial information in an integrated and concise manner. This study aims to investigate the effects of stakeholder engagement and corporate governance on IR disclosure. In this study, stakeholder engagement was proxied by ownership concentration, the effective tax rate, leverage, and employee compensation, while corporate governance was proxied by the independent board of directors, frequency of audit committee meetings, and gender diversity. Using purposive sampling methods, the sample was selected from a population of companies listed on the LQ45 Index of the Indonesian Stock Exchange. A total of 22 companies that were consistently listed on the LQ45 index during the period 2013–2016 were selected. Panel data regression was employed to analyze the collected data. The results show that only employee compensation had a significant positive effect on IR disclosure while the other variables did not have any significant effect. The results of this study could be used to select the variables that companies must consider when preparing for their IR disclosure to stakeholder.

Investigating the relationship between integrated reporting and firm performance in a voluntary disclosure regime: insights from Bangladesh

PurposeThe purpose of this study is observing the disclosure pattern of integrated reporting (IR) and investigating its relationship with a firm's operational, financial and market growth performance measured in the form of return on assets (ROA), return on equity (ROE) and market-to-book value ratio respectively in the voluntary disclosure regime of Bangladesh.Design/methodology/approachThis research is quantitative, based on a pooled-OLS regression analysis of 20 firms listed under ten different nonfinancial industries of the Dhaka Stock Exchange (DSE) for three financial years from 2015–2016 to 2017–2018, with 60 firm-year observations. A manual content analysis based on a structured integrated reporting disclosure index (IRDIN) measures the extent of disclosure in the corporate annual reports. The practical model consists of the dependent variable IRDIN and the independent variables ROA, ROE and market-to-book value ratio. The natural logarithm of total assets and financial leverage are the two controlling variables used in the model.FindingsThe findings deduced from the empirical results indicate that the IRDIN is positively and significantly related to all three performance variables. Content analysis shows an increasing pattern of disclosure of the constructed index elements by the sample firms.Research limitations/implicationsA Small sample size may deter the generalization of the research findings in other voluntary disclosure regimes. Self-constructed IRDIN index scores may be affected by subjective judgment while assessing the annual reports.Practical implicationsCapital market regulators can gain valuable insights regarding the suitability of implementing IR in Bangladesh as the results show a positive relationship of firm performance with the adoption of this revolutionary paradigm in corporate reporting.Originality/valueThis study adds value to the existing limited literature of IR disclosure and firm performance in Bangladesh by incorporating content analysis and regression analysis to understand how firms respond to the demand of value creation by the stakeholders in a voluntary disclosure regime. This study captures sample firms from all the nonfinancial industries of Bangladesh with a unique IR index, which is the first of its kind.

Insights from narrative disclosures regarding integrated thinking in integrated reports in South Africa and Japan

Purpose This study aims to provide insights into the poorly understood concept of integrated thinking by comparing and contrasting disclosures related to integrated thinking provided in integrated reports in two different institutional settings. Design/methodology/approach The study uses content analysis of the narrative sections of integrated reports to explore similarities and differences in the way the concept of integrated thinking is portrayed. It uses a matched sample of financial services companies in two different institutional settings, South Africa (where integrated reporting (IR) is mandatory and IR practices are world-leading) and Japan (where IR is voluntary and interest in IR is still developing). IR adoption is viewed through the lens of institutional theory, focussing on isomorphic forces which affect companies’ structure, policies and practices. Findings Even though the conceptualisation of integrated thinking differs between South Africa and Japan, in both settings there is a strong association between integrated thinking disclosures and corporate governance practices, materiality assessments and the pursuit of an industry leadership position, suggesting a link between these concepts and the underlying level of integrated thinking. Japanese disclosures appear to mimic South African disclosures, highlighting South Africa’s leading role in IR, although Japan shows more varied interpretations of integrated thinking. Originality/value This study contributes to the growing body of literature on the poorly understood concept of integrated thinking, responding to calls from both academics and practitioners for more research in this area. It shows the potential for integrated thinking to develop through a process of mimicry and highlights South Africa’s leading role in the dissemination of best practice in the field. Its findings relating to the fluid conceptualisation of integrated thinking in different institutional settings will be of interest to regulators and practitioners. To the knowledge this is one of the first studies to consider disclosures relating to integrated thinking in the financial services sector. Focussing on the financial services sector, with its unique features and regulatory frameworks, allows for deeper analysis, free from the potential distortions inherent in studying a broader cross-section of industries. The study also highlights the importance of corporate governance to integrated thinking, suggesting future research avenues.

Integrated reporting and changes in management control systems in large Japanese companies

Purpose This study aims to examine the integration of integrated reporting (IR) into the formal control systems (FCSs) early adopters use to implement IR, and investigate whether it drives informal control systems (ICSs) change at this early stage. Design/methodology/approach A case study was conducted in seven large Japanese companies. Data were gathered through semi-structured interviews and e-mail exchanges with the managers responsible for developing integrated reports in Japanese companies that excel in IR practices. Content analysis was adopted to analyze the data. Findings The results showed incremental changes to the integration of IR into FCSs. However, the integration may not cause radical changes to ICSs because all sample companies recognized the importance and necessity of embedding integrated thinking in all levels of companies to put it into practice for value creation over time. Originality/value This study contributes to IR research from an internal corporate perspective. Specifically, this study provides new knowledge on the relationships between IR and MCSs. This research also gives new insight into operationalization and internalization of sustainability in terms of IR and MCSs in companies, not only in Japan, but also worldwide.

Investigating the sustainability habitus: insights from Aramex’s sustainability practices and reports

PurposeThe current study aims to investigate the development of the sustainability habitus in the Arab Middle East (ME) based on the pioneer case organisation, Aramex, which has been the pioneer of sustainability practices and reporting. The context of the Arab region, as well as the global logistics sector, has significantly influenced the development of sustainable development at Aramex, as illustrated by their sustainability and integrated reports.Design/methodology/approachThe research approach of the current study is qualitative on the basis of open and selective coding techniques. The case organisation’s annual sustainability and integrated reports and additional relevant publicised information are analysed. Using publicised information from different sources increases triangulation and allows for more reliable findings. The theoretical context is Bourdieu’s habitus and field, which also reflects the interplay between habitus and field, and how Aramex’s sustainability practices and reports are being constructed.FindingsThe findings reflect Aramex’s sustainability practices and related reporting, subsumed in its organisational sustainability habitus. They span the sustainability reporting endeavours of the case organisation, commencing with the first sustainability report in 2006 until the most recent annual integrated report in 2018. Aramex is the precursor of sustainability and integrated reporting (IR) in the ME and is a significant contributor to developing a sustainability habitus in the region. The findings outline various elements of their reports as evidence of sustainability practices and reporting in the ME and the global logistics sector and as an illustration of the developing sustainability habitus.Originality/valueThis study reviews the original case of Aramex and its sustainability and IR practices. It also discusses the company’s practices and reporting details with regard to its organisational sustainability habitus and interplay with the local, Arab World and global, logistics sector, fields.

Imperative of Adopting Integrated Reporting by Quoted Companies in a Volatile Global Economy: Nigeria in Perspective

Integrated reporting (IR) is an emerging field of corporate reporting devised for corporate entities to ensure sustainable value creation in the short, medium and long term. The major thrust of this paper therefore was to determine the extent of the adoption of integrated reporting principles and practices as contained in the framework by quoted firms in Nigeria. Due to paucity of data from reporting entities on the implementation of integrated reporting, a documentary combined with descriptive research approach was adopted. Sample size was determined using the purposive random sampling method, which led to the selection of one (1) critical company from each sector making a total of twelve (12) companies quoted in the Nigerian Stock Exchange. This study will provide a new and deep introspection for companies intending preparing and presenting integrated reports and those already doing so. The result of the tested hypothesis shows a significant f-value of .65 (P-value = .089 > .05); thus leading to the acceptance of the null hypothesis. This indicates that there is no significant evidence of integrating reporting adoption and practice by quoted companies in Nigeria. This result is due possibly to the recency of integrated reporting disclosures and the lack of legislative framework to support it in Nigeria. Predicated on the result, it was recommended that companies quoted on the Nigerian Stock Exchange should be enlightened and motivated to adopt the integrated reporting principles and practices as this will promote the accountability and transparency framework of the firms. In addition, the full adoption of integrated reporting frameworks should be made one of the key requirements for companies to be listed on the Stock Exchange.

Integrated reporting and the epistemic authority of Big Data: An exploratory study from the banking industry

This paper aims at exploring how corporate members involved in integrated re-port (IR) preparation assess the reliability of Big Data as a new source of infor-mation. It investigates IR preparation within a company operating in the Italian banking industry that has adopted Big Data since 2015. Using the epistemic au-thority lens (Kruglanski et al., 2005), this study reveals how corporate members draw mainly on their professional background and the Big Data-related initiatives to define the extent to which Big Data contributes to IR preparation, with educa-tional background and corporate circumstances playing a less incisive part. Con-structing performance indicators, identifying prospective information to contrast criminal phenomena and lending support to relational sustainability all act as in-formational and motivational factors that lead members to rely on Big Data while preparing the IR. The paper contributes to the infant literature on Big Data in cor-porate reporting by offering early practical insights into how Big Data informs IR preparation. It also provides evidence of a necessary intertwining between ac-counting-based knowledge and training initiatives on advanced analytics to fully exploit Big Data in IR preparation.

The relationship between corporate social responsibility expenditures and firm value: The moderating role of integrated reporting

For decades, research has debated whether a firm’s corporate social responsibility (CSR) activities increase its firm value. Whereas the cost-concerned school proposes a detrimental effect, the value-creation school suggests a positive relationship. To date, empirical results are still inconclusive. One explanation might be that the relationship is not linear but U-shaped. Thus, both schools could coexist. Additionally, the disclosure of an integrated report might positively moderate the relationship, as integrated reporting (IR) should enhance investors’ information environment. This study applies the Ohlson model for a global and listed sample of 8,992 firm-year observations between 2012 and 2017 and provides evidence that environmental expenditures follow a U-shaped relationship, and that social expenditures follow an inverted U-shaped relationship with firm value. Based on these findings, IR positively moderates the association between environmental expenditures and firm value for firms with either a low or a high level of environmental expenditures. However, for firms that are “stuck in the middle” with regard to their environmental expenditures, the moderating effect of IR appears negative. The results show no indication of a moderating effect of IR for the inverted U-shaped relationship between social expenditures and firm value.

Disclosing Information on Financial and Non-Financial Capitals in the Integrated Report: An Empirical Analysis of Financial Industry

This study investigates how firms within the financial industry disclose financial and non-financial information in their integrated reports, by analyzing a sample of the banking sector published over five years (2014–2018). During the first phase, a content analysis methodology was conducted to investigate the disclosure level of six forms of capital, i.e., capitals. A principal component analysis then was implemented to reduce the dimensionality and investigate the relationship between capitals’ information. The main findings show that during the observed period, the focus mainly is on financial capital, while information on non-financial capitals is underdeveloped. A relationship exists among all non-financial capitals, but not between financial and non-financial capitals. The paper contributes to the academic debate on the use of integrated reports (IRs) in practice, providing useful insights regarding financial and non-financial disclosure.