Does Integrated Reporting Matter to the Capital Market?

Zhou, Shan; Simnett, Roger; Green, Wendy

doi:10.1111/abac.12104

Cited by 355 publications

(409 citation statements)

References 94 publications

(125 reference statements)

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“…Some of these studies concern capital market outcomes of integrated reporting in general, as opposed to the effectiveness of using the IIRC's framework because the current <IRF> is not mandated, nor do all companies producing an integrated report fully have to comply with the <IRF>. Zhou et al (2017) study the effectiveness of the IIRC's Framework and find that analysts' forecast errors are reduced the more a company's reports align with the <IRF>, and that, for some firms, this results in a reduction in the cost of equity capital. Additionally, in a value relevance framework, Lee and Yeo (2016) find evidence of a relationship between the degree of compliance of IR and market value, the relationship being stronger for firms with higher degrees of organisational complexity and with higher external financing need.…”

Section: Value Creation 232mentioning

confidence: 99%

Barriers to implementing the International Integrated Reporting Framework

Dumay¹,

Bernardi

Guthrie³

et al. 2017

MEDAR

209

170

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Purpose This paper is motivated by the call for feedback by the International Integrated Reporting Council (IIRC) from all stakeholders with knowledge of the International Integrated Reporting Framework (<IRF>) and specifically of the enablers, incentives and barriers to its implementation. The paper synthesises insights from contemporary accounting research into integrated reporting (IR) as a general concept and <IR> as espoused by the IIRC in the <IRF> (IIRC, 2013). The authors specifically focus on possible barriers and emphasise the specific issues the authors feel could be rectified to advance the <IRF>, along with the areas that may potentially hinder its wider adoption and implementation. Design/methodology/approach The paper draws upon and synthesises academic analysis and insights provided in the IR and <IR> academic literature as well as various directives, policy and framework pronouncements. Findings The flexibility and lack of prescription concerning actual disclosures and metrics in the <IRF> could allow it to be used for compliance, regardless of the other benefits lauded by the IIRC. Thus the authors see forces, both external and internal, driving <IR> adoption, with one prominent example being the European Union Directive on non-financial reporting. Because of the different ways in which IR is understood and enacted, there are numerous theoretical and empirical challenges for academics. The authors paper highlights potential areas for further robust academic research and the need to contribute to <IR> policy and practice. Research limitations/implications The paper provides the IIRC, academics, regulators and reporting organisations with insights into current practice and the <IRF>. The authors highlight the need for further development and evidence to help inform improvements both from a policy and a practice perspective. A key limitation of the authors’ work is that the authors draw upon a synthesis of the existing literature which is still in an early stage of development. Originality/value The paper provides the IIRC with several insights into the current <IRF> and specifically with the enablers, incentives and barriers to its implementation. Also, it provides academic researchers with a number of important observations and an agenda upon which the authors can build their future research.

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Section: Value Creation 232mentioning

confidence: 99%

Barriers to implementing the International Integrated Reporting Framework

Dumay¹,

Bernardi

Guthrie³

et al. 2017

MEDAR

209

170

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“…Corporate value and reputation can be affected by corporate reporting (Hrasky & Smith, 2008), therefore information beyond the financial statements is required for stakeholders to accurately gauge how companies are creating or destroying value (Buitendag et al, 2017;De Villiers & Sharma, 2017;De Villiers & van Staden, 2010b;Flower, 2015;Krzus, 2011b;Phillips et al, 2011;Rahman, 2014;Setia et al, 2015;Wee et al, 2016;Zhou, Simnett, & Green, 2017). Roberts (2011) claims that a focus on the interests and expectations of all stakeholders is bound to be in the best interest of the company as a whole.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Integrated reporting sets out to provide non-technical information about an organisation"s attempts to create value in terms of six capitals, namely financial, manufactured, intellectual, human, social, and natural capital (Ahmed Haji & Hossain, 2016;Barth, Cahan, Chen, & Venter, 2017;Brown & Dillard, 2014;Coulson, Adams, Nugent, & Haynes, 2015;IIRC, 2013;IoDSA, 2009;Krzus, 2011b;Lambooy et al, 2014;Magnaghi & Aprile, 2014;Phillips et al, 2011;Wild & van Staden, 2013;Zhou et al, 2017). The stakeholders of integrated reports are not only external, but also internal to a company (Chen et al, 2016;Eccles & Armbrester, 2011;Setia et al, 2015;Wee et al, 2016;Wild & van Staden, 2013;Williams & Adams, 2013), as these reports are used to enhance integrated thinking and to effect organisational change inside organisations (Adams et al, 2007;Bouten & Hoozée, 2013Brown & Dillard, 2014;Setia et al, 2015;Stacchezzini et al, 2016;Tilt, 2006).…”

Section: Integrated Reportingmentioning

confidence: 99%

The readability of integrated reports

Toit

2017

MEDAR

116

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Purpose -This is an exploratory study to investigate the readability of integrated reports. The aim is to assess whether integrated reports are accessible to their readership and add value to Research limitations/implications -The main limitation of the study lies in its exclusivelySouth African setting, which is the only country where integrated reports are recommended as part of stock exchange listings requirements. Another limitation is the fact that integrated reports are mainly aimed at informed users and is thus compiled with the informed reader in mind, which impacts on general readability. Practical implications -The results present new findings regarding integrated reportingpractice, which is of interest to firms, investors, regulators, amongst others. The findings show how the value-added by integrated reports could be improved.Originality/value -This study is the first to investigate the readability of integrated reports in a South African context. The results indicate that integrated reports are difficult to read and are only useful to a portion of the total intended population.

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“…Our paper contributes to the growing stream of literature on IR and on the relevance of IR to capital markets (see, among others, Barth et al, 2017;Bernardi & Stark, 2018;Serafeim, 2015;Zhou et al, 2017). More specifically, some studies investigate the impact of IR on the ability of financial analysts to make accurate forecasts (Abhayawansa, Elijido-Ten, & Dumay, 2018;Bernardi & Stark, 2018;Zhou et al, 2017), but they reach different conclusions, and currently, it is not yet clear whether financial analysts who employ IR manage to make better forecasts.…”

mentioning

confidence: 95%

Integrated reporting and capital markets in an international setting: The role of financial analysts

et al. 2019

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This study investigates the interplay between integrated reporting (IR) and capital markets. In particular, building on voluntary disclosure and information processing theories, we hypothesize and empirically find that IR adoption improves analysts' ability to make accurate earnings forecasts. Whereas previous studies focus on the South African context, we rely on an international sample that also allows us to study the moderating effect of the corporate governance regime (shareholder or stakeholder oriented). The results suggest that IR improves analysts' ability to make accurate predictions to a larger extent in North America than in Europe, and we derive interesting insights on the much‐debated nature of IR. This study offers valuable insights to policy makers interested in improving disclosure practices in the financial market.

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Does Integrated Reporting Matter to the Capital Market?

Cited by 355 publications

References 94 publications

Barriers to implementing the International Integrated Reporting Framework

Barriers to implementing the International Integrated Reporting Framework

The readability of integrated reports

Integrated reporting and capital markets in an international setting: The role of financial analysts

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