Does voluntary integrated reporting reduce information asymmetry? Evidence from Europe and Asia

Sriani, Dewi; Agustia, Dian

doi:10.1016/j.heliyon.2020.e05602

Cited by 18 publications

(19 citation statements)

References 67 publications

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“…We argue that a company will make voluntary disclosures, <IR>, if managers benefit from it. The benefits involve reducing capital costs, not harming company value, reducing the problem of information asymmetry (Sriani and Camfferman, 2018), increasing stock returns, encouraging efficient investments and improving the accuracy of analyst forecasts. However, the information will be disclosed if these benefits exceed the costs both internally and externally.…”

Section: Proprietary Cost Theorymentioning

confidence: 99%

The diffusion and adoption of integrated reporting: a cross-country analysis on the determinants

Oktorina

Siregar

Adhariani

et al. 2021

MEDAR

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Purpose This study aims to provide empirical evidence on the determinants of voluntary integrated reporting (<IR>) disclosure quality. Design/methodology/approach The samples include companies from the Integrated Reporting Examples Database on the International Integrated Reporting Committee’s (IIRC) website, except South Africa and Brazil, where reporting is mandatory. The final sample includes 29 countries, with 148 companies and 592 observations for the study period 2014–2017. Content analysis is used to measure <IR> disclosure quality derived from the <IR> principles and elements published by IIRC (2013). The fraction regression probit model is used to test the proposed hypothesis. Findings This study provides empirical evidence that competition from new entrants and country-level accounting competence encourage companies to implement the International Integrated Reporting Framework (IIRF). Signaling theory and diffusion of innovation theory can be used to explain this association. Meanwhile, product market competition of existing rivals has been found to reduce the adoption of the <IR> framework, which is consistent with the proprietary cost theory. Finally, this study finds that company reputation does not affect voluntary <IR> disclosure quality. Research limitations/implications This study did not examine the barriers to entry to explain the effect of competition from new entrants as a possible determinant of <IR> disclosure quality. Furthermore, the inclusion of <IR> in the accounting curriculum of universities and certification bodies in certain countries has not been considered as a control variable. The results might also be limited to companies that voluntarily submitted into the Integrated Reporting Examples Database on the IIRC website. All these limitations provide ample avenues for future research. Practical implications This research provides implications for governments and standard setters to further sharpen the competence of accountants through memberships in professional accountancy organisations or through training and seminars related to <IR>. The results also suggest that universities should include the topic of <IR> in the accounting program curriculum to increase the understanding of prospective accountants about this reporting regime. The results also show differences on the impact of competition between new entrants and existing rivals on <IR> disclosure quality. This can be used by IIRC or other standard setters to predict the <IR adoption>. Originality/value This study uses the diffusion of innovation theory to explain the association between country-level accounting competence and <IR> disclosure quality. Few studies have researched this association. The results show that a country’s accounting competence increases the application of the IIRF in corporate reporting. <IR> has been considered an innovation in corporate reporting and can be implemented by the company if its professional accountants have enough knowledge of this reporting framework.

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Section: Proprietary Cost Theorymentioning

confidence: 99%

The diffusion and adoption of integrated reporting: a cross-country analysis on the determinants

Oktorina

Siregar

Adhariani

et al. 2021

MEDAR

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“…The integrated reporter data were collected from IIRC database for the period of 2016 and 2017, particularly for the European firms only, therefore there were 126 integrated report as the final sample. It is then codified using content analysis (Weber, 1990) by referring and improving the code from the previous studies (Pistoni, Songini, and Bavagnoli, 2018;Sriani and Camfferman, 2018) and International Integrated Reporting Framework 2013 established by the IIRC. We considered five areas to be analyzed: 1) Conciseness, 2) Accessibility, 3) Readibility and clarity of document, 4) Reliability, and 5) Content element.…”

Section: Researh Methodsmentioning

confidence: 99%

“…We considered five areas to be analyzed: 1) Conciseness, 2) Accessibility, 3) Readibility and clarity of document, 4) Reliability, and 5) Content element. Pistoni, Songini, and Bavagnoli (2018), Hammond and Miles (2004) and Sriani and Camfferman (2018) used categorical score (0 and 1) and continuous scale (0,1, and 2), respectively. Despite of dummy variable, this more comprehensive continuous scale is used to grasp a more exhaustive analysis of the integrated reporting quality by capturing more variation among the (IR)reporter.…”

Section: Researh Methodsmentioning

confidence: 99%

Integrated Reporting Quality Assessment

Agustia¹,

Sriani²,

Wicaksono³

et al. 2020

JSSI

Self Cite

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This research aims to investigate the integrated reporting (IR)quality on European firms and whether there is an improvement on (IR)quality from 2016 to 2017. Using 63 firms in the period of 2016 and 2017, the content analysis method then applied to evaluate the quality of 126 integrated reports. This results then used to investigate whether there is an improvement of the integrated reporting quality from 2016 to 2017. The research findings show that the European firms, on average, published a moderate quality of integrated report. There is also improvement in integrated reporting quality from 2016 to 2017, but partially only, especially for readibility and clarity of document and content element area.

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“…Integrated Reporting According to the International <IR> Framework of the IIRC. In the context of investment decisions, decision-makers increasingly suffer a lack of information, which can be explained on the one hand by the rise in information relevance and on the other hand by the growth in information complexity (Cheng et (Sriani & Agustia, 2020). For that reason, the framework, published in 2013, is currently in a consultation phase to evaluate its content and meet changing market needs.…”

Section: Information Focusmentioning

confidence: 99%

The Role of Integrated Reporting in Enhancing Corporate Transparency and Communication

Mock

Gonzálvez-Gallego

Razik

2021

BEL

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The primary purpose of the research is to analyze and evaluate the prospects for the success of Integrated Reporting in terms of its potential to increase corporate transparency and enhance corporate communication. The relevance of the decision of this scientific problem is that the European Union published a proposal for the Corporate Sustainability Reporting Directive in April 2021 that highlights the importance of intangible assets and value creation. The Directive serves to ensure companies provide consistent and comparable sustainability information. In this context, it places sustainable reporting on par with financial reporting. Systematization of the literary sources and approaches indicates that company reports developed from a financial perspective over the triple bottom line sustainability approach to an integrated approach. Moreover, stakeholders are increasingly demanding more information. Reducing information asymmetries has always been an essential task of company reports. Consequently, the primary purpose of this research is to identify whether Integrated Reporting, according to The International Integrated Reporting Framework, is a successful tool to enhance corporate transparency and communication. Integrated Reporting presents financial and non-financial information against the background of their contribution to value creation. Methodological tools of the research are a research synthesis and meta-analysis literature review. These instruments are developed and enriched using document analysis and systematic content analysis. The research findings suggest that integrated reports enhance transparency and communication, leading to more trust and resilience. Moreover, the results indicate that the principle-oriented framework and the Guiding Principle Materiality enable companies to respond to their specific characteristics to meet the stakeholders’ requirements. The research empirically confirms and theoretically proves that Integrated Reporting can be seen as a suitable instrument for creating greater transparency, thus, a further development step in corporate reporting and communication. Integrated Reporting should therefore not be understood exclusively as a separate reporting tool but rather as a holistic management approach to implement integrated corporate management. The research results are beneficial for academic researchers and practitioners since the research provides an insightful and comprehensive overview of Integrated Reporting. Furthermore, it is also possible to derive practical recommendations for the application of Integrated Reporting.

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Does voluntary integrated reporting reduce information asymmetry? Evidence from Europe and Asia

Cited by 18 publications

References 67 publications

The diffusion and adoption of integrated reporting: a cross-country analysis on the determinants

The diffusion and adoption of integrated reporting: a cross-country analysis on the determinants

Integrated Reporting Quality Assessment

The Role of Integrated Reporting in Enhancing Corporate Transparency and Communication

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