Towards the Voluntary Adoption of Integrated Reporting: Drivers, Barriers, and Practices (original) (raw)
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Research agenda on Integrated Reporting- New Emergent Theory and Practice
This paper investigates integrated reporting by presenting the main theories that surround this new and emergent reporting trend. We analyze the previous literature in the field of corporate disclosure, non-financial reporting, and sustainability providing a deep understanding on the process of diffusion and adoption of integrated reports. The paper represents a discourse on theories about integrated reporting, claiming that institutional theory and diffusion and adoption theory represent solid research base for studies in the area of integrated reporting. We also employ in a presentation of the most appropriate methodology and data sources for research on integrated reports. We consider that the current paper sets the main coordinates of integrated reporting by connecting this field to the contemporary literature and providing a set of methodologies for future studies along with the research fundamentals in the form of ground theorization.
Factors Affecting the Companies' Preferences on Integrated Reporting
The aim of this study is to reveal the factors affecting the companies' preferences towards publishing integrated reports. By reviewing the literature, the factors are classified under two groups, namely; country-specific factors and firm-specific factors. The general results obtained from studies on integrated reporting shows that in countries where societal values prevail over individual values, where there is a high demand for information and where strong enforcement mechanisms exist, it is expected that companies are more likely to publish integrated reports. From a micro-level (firm specific) perspective, large and profitable companies with strong governance structure, whose Boards include diverse perspectives are accepted to be closer to integrated reporting.
Reporting dimensions in Accounting and Finance arena have been gradually evolved and it is still transforming for new aspects which gives superior disclosures. Recently most of the companies around the world have adopted Integrated Reporting (IR) concept which some far beyond the sustainability reporting in their financial statements. Since this is newly emerged concept and unavailability of considerable amount of research studies, most companies have not adopted IR for their reporting. Therefore, the objective of this study is to identify the firm characteristics that affect towards the adoption of IR which are listed in Colombo Stock Exchange (CSE). For this study, 50 companies which have adopted IR for their reporting are randomly selected out of 61 IR adopted companies and 50 non IR adopted companies as the sample. Data was collected from the annual reports of selected companies for the year 2016. Adoption of IR was used as the dependent variable while structure related, performance related and market-related firms' characteristics of a firm were selected as independent variables. Structure related variables are firm's listed age, leverage and ownership dispersion. As the performance related variables, profitability, assets and total sales were considered. Market value, audit firm size and industry type were selected as market related variables. Logistic Regression was employed to analyze data as the model has dichotomous categorical outcome. Findings revealed that there is a significant impact of firm's total assets on adoption of IR. Findings of this study provide information to capital market regulators and government considering the policy to mandate IR and promote IR.
NEW CORPORATE REPORTING TRENDS.ANALYSIS ON THE EVOLUTION OF INTEGRATED REPORTING
The objective of this paper is to present the new corporate reporting trends of the 21st century. Integrated reporting has been launched through a common initiative of the International Integrated Reporting Committee and global accounting organizations. However, the history of integrated reports starts before the initiative of the IIRC, and goes back in time when large corporations begun to disclose sustainability and corporate social responsibility information. Further on, we claim that the initial sustainability and CSR reports that were issued separate along with the financial annual report represent the predecessors of the current integrated reports. The paper consists of a literature review analysis on the evolution of integrated reporting, from the first stage of international non-financial initiatives, up to the current state of a single integrated annual report. In order to understand the background of integrated reporting we analyze the most relevant research papers on corporate reporting, focusing on the international organizations’ perspective on non-financial reporting, in general, and integrated reporting, in particular. Based on the literature overview, we subtracted the essential information for setting the framework of the integrated reporting evolution. The findings suggest that we can delimitate three main stages in the evolution of integrated reports, namely: the non-financial reporting initiatives, the sustainability era, and the revolution of integrated reporting. We illustrate these results by presenting each relevant point in the history of integrated reporting on a time scale axis, developed with the purpose of defining the road to integrated reporting at theoretical, empirical, and practical levels. We consider the current investigation as relevant for future studies concerning integrated reports, as this is a new area of research still in its infancy. The originality of the research derives from the novelty of integrated reporting, and the aim to explain its origin, which is important to know if we want to understand the present and the future of corporate reporting.
Integrated Reporting Insight: Why Organisation Voluntarily Reports?
2020
This study is advancement of study of (Dragu & Tiron-Tudor, 2013) and (de Villiers, Hsiao, & Maroun, 2017), overcoming their limitations and factors left in their study. The revelation is accomplished by studying PESTLE factors and various theories in coincidence with Integrated Reporting (IR). The author revealed that the main factors that encourage the adoption of IR are the matter of self-interest, regulatory pressure, managerial attitude, motivations, market force, disclosure of non-financial parameters, managing different group of stakeholders and development of business model. Furthermore, IR framework is surrounded by various theories i.e. institutional theory, legitimacy theory, innovation diffusion theory, stakeholder theory, stewardship theory, positive accounting theory and the theory of signalling. Subsequently, considering all the possible determinants and the surrounded theory, a conceptual model has been established for the facilitation of adopting IR framework.
Sustainability, 2018
This paper looks at the topic of regulation of integrated reporting for listed companies, with the aim of contributing to the debate on the usefulness of introducing a mandatory regime, both from the perspective of integrated performance sustainability of companies and from that of relevance of information for providers of financial capital. The study is based on empirical research carried out on a sample composed of companies operating in territories where the adoption of integrated reporting is voluntary (Europe) and those operating in a country where adoption is mandatory (South Africa). The research shows that (a) in voluntary regimes, levels of integrated performance achieved by companies are higher; (b) mandatory regulation produces positive effects on integrated performance levels in the medium term; (c) integrated performance indicators are value-relevant, though having different levels of relevance under the two regimes examined.
Sensemaking of Financial Institution Actors in the Adoption and Elaboration of Integrated Reporting
Review of Business Management, 2020
Purpose-To analyze the sensemaking (Weick, 1995) of the actors involved in the adoption and elaboration of Integrated Reporting in a Brazilian financial institution (Itaú Unibanco S.A.). Design/methodology/approach-Exploratory and interpretative case study, with semi-structured interviews with nine actors who compose the Working Group for elaborating Integrated Reporting, alongside documental analysis. The data were analyzed using the content analysis technique. Findings-Sensemaking applied to Integrated Reporting is an interpretative process involving its elements (business models, capitals, material themes, value creation), it promotes organizational change by means of disruptive actions, and it is adaptive when it adjusts to organizational culture. Originality/value-The study contributes to the discussion of the adoption of Integrated Reporting at the enterprise studied, at the Brazilian Commission for the Follow-up of Integrated Reporting, at the International Integrated Reporting Council, at Brazilian consultancy firms, and among users of the report. The study also contributes to the literature relating to this theme.
Journal of Management Control, 2016
In view of the increased demand for non-financial reporting after the financial crisis of 2008/2009, integrated reporting (IR) plays a key role in management control and stakeholder relations management. As a consequence of “integrated thinking” IR combines traditional financial accounting with sustainability and corporate governance related issues to enhance the decision usefulness of modern business reporting. Although there has been steady growth in the awareness of IR research (Eccles et al. J Appl Corp Finance 27:8–17, 2015), the current state of empirical IR research activities is not well described so far. This literature review evaluates 44 empirical studies on IR which were published especially after the adoption of the IR framework by the International Integrated Reporting Council (IIRC) in December 2013. We will briefly introduce the IR research agenda, which provides a clear structure for the analysis of current empirical research activities in this field. For the market, organization and individual/group decision level, we show which factors contribute to IR implementation and IR quality. Furthermore, empirical research focuses on market reactions to IR. We also stress the limitations of the studies and provide useful recommendation for future IR research activities for each level of analysis.
Integrated reporting: A cross-cutting theoretical view on its use and value
Journal of Economic and Financial Sciences
Orientation: Diverging views on the relevant content and target audiences of financial and non-financial reporting have caused a proliferation of reporting standards. This has led to calls for integration and convergence in approaches.Research purpose: Wide-ranging findings have been reported on the drive behind and consequences of integrated reporting (IR). Theoretical perspectives used to review financial and non-financial corporate reporting were critically compared to propose a cross-cutting theoretical view on IR, thereby enhancing multidisciplinary dialogue.Motivation for the study: Integrated reporting has pointed to fragmentation in corporate disclosures. The call for integrated thinking also exposes not only divergent reporting approaches but also a gap between two main schools of thought in accounting research and theory.Research approach/design and method: A critical literature review was conducted, examining scholarly research on IR, practitioner reports and relevant tex...
Amfiteatru Economic, 2019
Integrated reporting promotes changing the internal processes of companies to generate improved performance. One way toward this goal is to use integrated thinking as a tool to achieve a 'better understanding of the factors that materially affect an organization's ability to create value over time', that is the six capitals, as suggested by the International Integrated Reporting Council. Our goal is to identify 'effects of learning' in the field of integrated reporting on the performance and reporting practices of companies. More specifically, we aim to identify how and to what extent integrated thinking translated into their reporting practices and performance, while companies implemented the International Integrated Reporting Framework. Therefore, we analyse and compare the reporting practices and performance of European companies included in the International Integrated Reporting Council's Pilot Program for two moments in time: 2013 and 2016. We use a set of nineteen indicators, considered as the most important for the presentation of the six capitals. Thus, we provide insights about how integrated reports disclose information concerning the capitals. Results show improvements in performance and the diversification of indicators disclosed in the reports. However, changes are not exclusively attributable to integrated reporting; reporting experience is also a contributing factor. The study contributes to the literature on the impact of integrated reporting in practice.