Integrated Reporting Research Articles

The impact of audit committee attributes on integrated reporting quality: evidence from European companies listed on the STOXX Europe 600 index

PurposeThis paper aims to shed light on the relationship between audit committee attributes and integrated reporting quality (IRQ).Design/methodology/approachData on a sample of 360 European firms selected from the STOXX Europe 600 index between 2010 and 2021 were used to test the model based on multiple regression for panel data to analyze the effect of audit committee attributes on IRQ. This paper considers generalized least squares (GLS) estimation for panel data models.FindingsThe findings of this study confirm expectations concerning the impact of audit committee attributes on the IRQ. Indeed, audit committee independence and meetings have a significant positive impact on IRQ. However, no significant association is found between financial expertise and IRQ.Practical implicationsThe findings of this paper have significant implications for policymakers, who, through proper legislation, should encourage the formation of larger audit committees and ones with a higher percentage of independent members. They should also establish a minimum number of audit committee meetings per year. These regulations, which aim to increase the efficacy of audit committees’ supervisory and monitoring tasks, would promote corporate transparency and improve IRQ.Originality/valueThis study supports the existing literature. First, it expands the scientific debate on IRQ. Second, unlike previous studies, which used more subjective methods to measure the degree of integrated reporting (IR), this study relied on the CGVS variable from the DataStream ASSET 4 Database. Third, the research is novel because it indicates the crucial role of internal assurance mechanisms in wide managerial reporting practices in European companies. The sample consisted of European firms only, whereas previous studies used a global sample. Finally, this study is based on recent data (2010–2021), while other studies covered the period between 2008 and 2013.

What Effect Does CEO Power Has over Integrated Reporting? Evidence from Indonesian Listed Companies

This study aims to analyze the role to chief executive officer (CEO) in integrated reporting (IR) adoption and whether growth opportunities moderate this role. This study is based on an unbalanced data panel of 106 firms listed on Indonesian Stock Exchange from 2017 to 2021 (530 observations). Using a panel regression model this study found that CEO power does not affect IR, and growth opportunities do not modify the relationship. Furthermore, this study also revealed that there is only one company sample that published IR based on the International Integrated Reporting Council (IIRC) framework in 2021. It is suggested that policy makers need to encourage IR adoption trough regulation and incentives.

The impact of environmental, social and governance policies on companies’ financial and economic performance: A comprehensive approach and new empirical evidence

In the last decade, the use of integrated reports (IR) comprising information on non-financial indicators from the environment, social, and governance (ESG) category has increased in time. Companies are now focusing not only on financial reporting but are notably including non-financial issues in their public reports. In doing so, they seek to align activities with the expectations of their stakeholders and the society in which they operate, as well as with various regulations, which are increasingly relevant worldwide. This study examines the impact of ESG reporting on company performance. Our research involved analyzing financial and non-financial data from 2,400 companies extracted from the Refinitiv Eikon database. Two methods of quantitative analysis were applied, namely multiple linear regression models processed by the robust regression method and structural equation modelling. Main findings entail that ESG indicators had strong and medium effects on company performance, but these effects varied across different dimensions, requiring a tailored approach to embed ESG factors in corporate strategy to enhance overall performance. Our paper provides a new perspective on the current and the potential impact of ESG reporting, based on systematic theoretical and empirical analyse , with multiple implications for business administration and management.

The Adoption of Integrated Reporting in Lebanon (An Exploratory Study)

This research seeks to explore the potential adoption of integrated reporting (IR) in Lebanon and highlight the stakeholders' need for a more comprehensive reporting tool. For this purpose, the characteristics of Roger's diffusion of innovation (DOI) theory (2003) were used to investigate the factors that will motivate or hinder the adoption of IR in Lebanon. The methodology of this study was based on the sequential exploratory mixed method. In which the research started first with a qualitative study using the theme extracted from DOI theory based on a study by Samy & Robertson (2019), to formulate interview questions that asked five knowledgeable auditors in IR through semi-structured interviews, the interviews were analyzed by thematic analysis. from the result of the qualitative study, the research developed the research hypotheses, and the instrument tool for quantitative data collection was created. In the quantitative phase, the questionnaire was distributed to 290 participants experts in the accounting and finance field. Based on the Integrated of two phases, this study revealed that the relative advantage of innovation IR has a positive advantage on the adoption of IR, and incompatibility hurts the adoption of IR, whereas the complexity of innovation (IR) hurts the adoption of IR according to Samy & Robertson (2019) and the first phase of this study(qualitative phase), while the quantitative phase found that no relationship between themes of complexity that are emerged from the semi-structured interview and adoption of IR.

Voluntary disclosure with the International Integrated Reporting Council (IIRC) framework and value relevance

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.

BOD characteristics and their impact on the link between ESG disclosure and integrated reporting disclosure quality: a study of Egyptian non-financial firms

AbstractThis study examines the impact of environmental, social, and governance (ESG) disclosure on integrated reporting disclosure quality (IRDQ) and the moderating role of board of directors (BOD) characteristics. Prior research on ESG disclosure and IRDQ has been limited, especially in emerging economies like Egypt. Furthermore, the influence of BOD attributes has been underexplored. This study aims to address these gaps. A sample of 34 Egyptian non-financial companies under ESG disclosure mandates from 2015 to 2021 is analyzed using regression analysis. The results show a significant positive association between ESG disclosure and IRDQ. Furthermore, BOD gender diversity and size are found to positively moderate the ESG–IRDQ relationship. These findings highlight that appointing more women on boards and increasing board size can improve IRDQ when firms engage in ESG disclosure. However, the small sample size of ESG-mandated companies and inherent limitations in constructing disclosure indices constrain the generalizability of results. Overall, this study provides timely empirical evidence on ESG adoption within the unique Egyptian context and its influence on integrated reporting (IR). It contributes to literature by identifying specific BOD characteristics that enhance IRDQ. The results offer practical insights into how companies, regulators, and stakeholders can leverage board diversity and size as well as ESG disclosure to improve IRDQ.

Nexus of circular economy R0 to R9 principles in integrated reporting: Insights from a multiple case study comparison

AbstractOver recent years, the Circular Economy (CE) has turned into a debated area worldwide as a way of achieving a more sustainable society. However, little is known about how companies can disclose CE‐related activities in their corporate reporting. This paper aims to explore how and to what extent CE‐related information is included in Integrated Reporting (IR) practices by promoting Sustainable Development Goals (SDGs). The study applies qualitative content analysis and thematic analysis approaches to explore the associations with CE, IR, the six capitals and SDGs. The institutional theory approach has been adopted to justify incorporating CE R‐principles activities into IR practices. Multiple case study findings demonstrate that every case company minimum one time cites the CE R principle, while case companies seen to be more involved in the reduce (R1), reuse (R2) and recycle (R7) are engaged with IR practices and focussing on SDGs. Whereas coercive, normative, and mimetic isomorphism mechanism substantially impacts CE activities concerning IR practices, we can argue that mimetic isomorphisms need further investigation because no structures and frameworks are available. In terms of managerial implications, this study proposed a combined framework of CE and IR that provides a conceptual picture of how CE activities intermesh with the IR framework and the six capitals, both essential for the Sustainable Development (SD) agenda participation and value creation process of companies.

The impact of CEO compensation and governance disclosure on firm value moderated by integrated reporting

Firm value can increase market confidence, not only for current performance but also for the company’s prospects in the future Fama (1978). To prove empirically the effect of chief executive officer (CEO) compensation and governance disclosure on firm value moderated by integrated reporting (IR) is the aim of this study. The study population is Asian companies registered in the Integrated Reporting database examples. Based on the specified sample criteria, 135 secondary data were obtained from 2019–2021. The analysis tool used to process the data is WarpPLS 7.0. This study gives the result that firm value is influenced by governance disclosure and IR moderates the effect of governance disclosure on firm value, while CEO compensation has no effect on firm value. The practical implications of this study are to confirm the importance of corporate governance disclosure, the role of IR in increasing the value of companies, and its impact on investment decisions. In addition, this study is also useful for regulators in relation to the preparation of corporate financial reporting policies so that they are transparent and accountable.

Nexus between integrated reporting and firm value: A systematic literature review

The objective of this manuscript is to review the existing literature regarding integrated reporting (IR), focusing on theories, factors influencing it and its outcomes, and the methodologies adopted. The review encompasses a total of 27 studies conducted between 2006 and 2023. Following the earlier studies, four significant steps, i.e., searching for relevant studies, applying inclusion/exclusion criteria, applying methodological review protocol and finally synthetizing the protocol has been used to collect the relevant studies. The findings of the present study indicate that the majority of previous studies have relied on quantitative research methods and secondary data sources. Moreover, only two studies Boshnak (2022) and Alyousef and Alsughayer (2021) have considered both financial and non financial disclosures which represent the features of IR. The findings of the present study also identified firm size, leverage, the degree of government ownership, the degree of family ownership, firm profitability, audit firm size, and firm age as the determinants of corporate social and environmental voluntary disclosure. Moreover, the finding also indicated that among all the theories that contribute to IR, only agency theory, resource based theory, legitimacy theory and stakeholder theory were mostly considered by the previous studies.

Assessing the Disclosure of Materiality Analysis in Integrated Reports: Evidence from Sri Lanka

The disclosure of materiality analysis in integrated reports demonstrates the genuine intention of business organisations to fulfil stakeholders' information requirements through stakeholder needs and expectations analysis. This study assesses whether the Sri Lankan companies have taken the required initiatives to disclose the materiality analysis in their integrated reports. This research will assess the above concerns with the support of stakeholder and legitimacy theories. Integrated reporting (IR) has opened avenues for increasing the content validity and quality of reports published by companies by providing required guidelines and reporting Standards. Reporting on the materiality analysis is required by the Global Reporting Initiative (GRI) 3 Standard and the International Integrated Reporting Council (IIRC) Framework but remains voluntary. The revised Standard provides guidance on what information the companies are required to disclose, how they have prioritised material topics, and how they have decided the extent of related disclosures. Accordingly, this study will provide insights into the aspect of disclosure of materiality analysis in the annual reports of companies listed in the Colombo Stock Exchange (CSE) by analysing the annual reports of the selected listed companies in the years 2016/17, 2017/18, 2018/19, and 2019/20. A binary disclosure index has been developed to indicate whether the materiality-related disclosures have been mentioned and explained as required. The disclosure index will be quantified and statistically tested to arrive at conclusions regarding the analysis. The study has revealed that there is a growing trend in the disclosure of materiality analysis in the annual reports of the Sri Lankan listed companies. The companies have dedicated a few pages in their annual reports to discuss their materiality analysis process and the key stakeholders. Meanwhile, there is a lack of information on the methods used by the companies to identify their stakeholders. However, they have revealed information on the methods used to identify their material topics to some extent.

IMPACT OF INTEGRATED REPORTING DISCLOSURE ON ACCOUNTING-BASED PERFORMANCE OF ASIAN LISTED COMPANIES

This study aims to examine the relationship between the quality of integrated reporting (IR) disclosure and firm performance in Asia listed companies. An integrated report score based on eight content elements taken from the IIRC framework was used to assess the quality of the IR disclosures of 90 Asian companies in 2019. Firm performance is evaluated using accounting-based measures such as return on assets (ROA) and return on equity (ROE). This study used a positivist research approach, the results show that the quality of IR disclosure of listed companies in Asia is sufficient. The study found a significant positive relationship between IR disclosure quality and ROA & ROE. It shows that the higher the quality of IR disclosure, the better the economic benefits of the company. The main practical implications of this study focus on calling for improved quality of IR issued by listed companies in Asia, as it provides evidence for a higher degree of financial performance achieved through high-quality disclosure of IR.

Interconnecting financial and sustainability information: does the multi-capital approach explain adherence to the IIRC framework?

ABSTRACT Integrated Reporting (IR) is a major innovation encompassing both financial and sustainability information. The multi-capital approach that characterises the International Integrated Reporting Council (IIRC) framework aligns with resource dependency theory. On this basis, we design a disclosure index to assess adherence to the IIRC framework in Down Jones Sustainability Europe Index (DJSEI) company reports, and examine whether the value drivers embedded in the capitals explain it. We posit that integrated corporate thinking drives business practices and is reflected in the communication strategy through IR. Results confirm a high degree of use of the framework. Regarding the multivariate analysis, natural capital has a significant and positive association with the level of adherence; but human-related capital is negatively associated, mainly due to intellectual capital. Firms that state following the IIRC guidelines adhere more to the framework. This highlights the need for framework clarification to prevent IR misuse as an impression management tool.

New Connections Between Integrated Reporting and Intellectual Capital: Future Research Implications in the Context of Sustainability-Related Information

Purpose: The objective of this study was to identify new links between Integrated Reporting (IR) and Intellectual Capital (IC) fields, useful for sustainability and climate change disclosures with ISSB standards. Theoretical Framework: The literature that has integrated IC and IR fields has been developed, mainly from the IC research perspective, addressing a wide range of thematic specializations that emerge when analyzing the research areas. Design/Methodology/Approach: We developed a Structured Literature Review (SLR) of articles indexed in Scopus, which allowed us to build a specific analytical framework from emerging categories; we rely on AtlasTi and VOSviewer software. Findings: We found that the literature converges towards the following research areas: Reviews and reflections on the IR framework as a means for IC disclosure; Proposals to improve the IR framework and IR disclosures through IR; The IR framework and definition, measurement, and management of IC within organizations; disclosures of CI in contexts of practical adoption of RI; Disclosure of IC through IR, its determinants, and effects. Research, Practical & Social Implications: We identified the need to advance research under a performative approach, research on stakeholder satisfaction by revealing IC through IR and the relationship of IC with information related to sustainability in the new ISSB context. The paper identifies previously unexamined connections between IC and IR and proposes future avenues of research. Originality/Value: This study raises the need for increased policy research to define a common language for presenting comparable IC information in ISSB sustainability reports. In addition, studies are needed to help identify IC information, other IR capital and metrics, which could represent material information for investors to assess sustainability-related risks and opportunities.

Measuring the integrated reporting quality in Europe: balanced scorecard perspectives

Purpose The aim of this study is to evaluate the adoption and quality of integrated reports in the European Union (EU). Design/methodology/approach The sample consists of 147 listed firms from the 18 EU countries during 2013–2020. This study creates a disclosure index – based on the balanced scorecard (BSC) that reflects the information content of integrated reports. The content analysis method is used to measure the integrated reporting quality (IRQ). Findings The findings demonstrate that the IRQ increased across the study’s time frame, going from 49.3% in 2013 to 77% in 2020. Furthermore, financial disclosures still get the most attention in the integrated reporting (IR), followed by learning and growth perspective disclosures. In addition, businesses in the financial and industrial sectors rely more on integrated reports. However, the utility sector has the highest IRQ score. By country, Spain has the highest rate of IR adoption, followed by France. Other countries, such as Austria and Hungary, have only implemented IR by one company each. Research limitations/implications This study adds to the IR literature a new approach to measure IRQ by linking BSC with the IR framework. Empirically, businesses of any size can use this method to assess the degree of balance between the revealed financial and nonfinancial information in their reports. Practical implications Empirically, this study helps IR practitioners in determining how widely IR is used in Europe and in updating the database on the IR website. It helps them update and improve the IR framework by identifying the elements that have the least transparency and quality, investigating the causes and enhancing them. Originality/value To the best of the authors’ knowledge, this study is the first to examine the IRQ in EU countries by linking the BSC with IR elements. This is to split the elements into their own pillars, making it easier to track disclosure and evaluate the corporations’ interest in revealing these perspectives, on their own and collectively.

Feminist Economics and Feminist Accounting in Dialogue: The Contribution to World Inequalities and Ecological Emergencies

Researchers from different fields frequently draw attention to prejudice, discrimination, and contested meanings in their work by utilizing feminist theory. In this vein, the purpose of this work is to contribute to the debate on the interaction between feminist economics (FE) and feminist accounting (FA) in order to understand whether there are openings towards possible change. Although there have only been a few uses of feminist theory in accounting, academics are likely aware of it. Our study in this field aims to change these issues not only to bring them to light, drawing from wondering if the theory of the firm underpinning the IR (Integrated Reporting) framework responds to the criticisms labeled by FE and FA and helps lessen global inequality and ecological emergencies. The research question is: “Does the theory of the firm underpinning the IR framework respond to the criticisms labeled by FE and FA in dialogue while contributing to reducing world inequalities and ecological emergencies?” A multi-method investigation was carried out, using both deductive and inductive approaches. The research design encompasses both the literature analysis about the connection between FE and FA and the theory of the firm at the core of IR, and the empirical analysis of the content of the 2020 integrated reports released by 21 companies active in the chemical/pharmaceutical sector, and taken from, the IR website. Findings reveal the “weakness” of IR in becoming an engine for effective change - albeit with some exceptions - and a substantial persistence of the status quo compared to the mainstream.

The Effect of Board Gender Diversity on Corporate Sustainability Performance with Enterprise Risk Management as a Moderating Variable

Corporate Sustainability Performance is an approach taken by companies to create long-term profits by developing business strategies that prioritize profits and pay attention to social, cultural, economic, and environmental factors. Gender diversity plays an important role in achieving sustainable performance because the gender diversity of board members can improve company performance. This study aims to examine the effect of board gender diversity on corporate sustainability performance by using ERM as a moderation variable. The study in this study took samples of energy and mining companies on the IDX. This includes mining companies that have published integrated reports (IRs). The type of data used is secondary data using random sampling to determine the number of sampling trials. This study used qualitative descriptive approach and causality method. Data analysis in this study used SPSS to examine the effect of the independent variable on the dependent variable. The results of this study provide an in-depth understanding of the relationship between independent and dependent variables, with implications that can increase awareness of the importance of gender diversity in the context of sustainable company performance.

Early adopters of institutional creativity in integrated reporting

PurposeIn the last two decades, risk reporting has followed a normative and calculative culture rather than the “materiality” of data. Although integrated reporting (IR) has become flooded with extra information, it does not adequately disseminate material information to stakeholders. In addition, the poor tone from the top diminishes creativity. This study aims to investigate how companies creatively address issues of the materiality of risk information in IR and how IR can be aligned with enterprise risk management.Design/methodology/approachQualitative research was conducted via interviews with 50 chief risk officers and senior management executives in the Indian and UK insurance markets.FindingsOverall, five institutions were observed to exhibit elements of being early adopters of institutional creativity. This confirmed the present study’s theoretical contribution of five divergent types of early adopters. The motivations for creativity are reflected in the resources available to these institutions.Originality/valueTo the best of the authors’ knowledge, this study provides a new insight into IR from internal mechanisms to deal with issue of materiality.

Institutional Ownership and Integrated Reporting in the Digital Age: A Conceptual Exploration of Firm Performance in Malaysia

This concept paper explores the potential moderating role of institutional ownership on the relationship between Integrated Reporting (IR) adoption and firm performance within the context of the digital business era, specifically in Malaysia. Drawing on stakeholder theory and agency theory, the paper highlights the dual role institutional investors can play in shaping a firm's adoption of IR and its subsequent effect on performance. Through a comprehensive review of the existing literature, the paper unravels the unique challenges and opportunities that arise when adopting IR in the digital business landscape, particularly in developing nations with concentrated ownership structures. The study emphasizes the importance of nuanced understanding to promote corporate transparency and sustainable value creation. It aims to guide future research endeavors, informing policymaking and business practices to optimize the benefits of IR in the digital era. The conceptual framework and discussions put forth in this paper are intended to contribute to the broader academic discourse on the evolution of IR practices in the digital business era.

Improving Quality of Information: Does Integrated Reporting matter? Evidence from Sri Lankan Listed Companies

This study examines the information quality of Integrated Reporting (IR) adopted companies compared to non-adopted companies. Information Quality was measured in terms of the decision usefulness approach based on fundamental Qualitative Characteristics (QCs) of financial information. Data were collected through annual reports of listed companies of 26 IR-adopters and 27 non-adopters for 2010 (pre-adoption year) and 2019 (post-adoption year). The results revealed IR-adopters have significantly improved information quality from 2010 to 2019 compared to non-adopters. Also, there is a significant positive relationship between the information quality of IR-adopters with the number of years of experience in IR.
 Our novel QCs-based quality measurement index provides numerical measures for evaluating information quality. The study shows that IR has achieved its overall objective of improving information quality in the Sri Lankan context. Thus, it provides moral confidence for the firms expecting to adopt IR to improve their information quality in the future.

CEO tenure, board monitoring and competitive corporate culture: how do they influence integrated reporting?

PurposeThis study aims to explore the association between chief executive officer (CEO) tenure and the quality of information disclosed through integrated reporting quality (IRQ), which combines financial and non-financial data. The authors also investigate how formal (e.g. board independence and gender diversity) and informal (e.g. corporate culture) governance mechanisms influence this association. By analysing these factors, the authors expect to provide valuable insights on the impact of CEO tenure and governance structures on the comprehensive nature of integrated reporting.Design/methodology/approachThis study uses a sample of the top 200 Australian Securities Exchange (ASX)-listed companies from 2015 to 2019. IRQ is measured through levels of compliance with the integrated reporting (IR) framework proposed by the International Integrated Reporting Council (IIRC). The hypotheses are tested using multiple regression analyses.FindingsThe authors find that CEO tenure is negatively associated with IRQ. Furthermore, CEO tenure has a more positive influence on IRQ in the early CEO tenure years than later ones. The authors' study finds that the association between CEO tenure and IRQ is insignificant when firms have a high level of monitoring, as measured by board independence and gender diversity. The authors also document that competitive corporate culture moderates the negative association between CEO tenure and IRQ.Originality/valueThe authors' study highlights the significant impact of internal formal and informal governance mechanisms on disclosure practices in Australia's voluntary IR environment. By shedding light on these factors, the authors' research enhances understanding of Australian companies' IR practices and offers valuable insights for scholars, policymakers and practitioners in the field.