Effects of Integrated Reporting on Corporate Disclosure Practices regarding the Capitals and Performance

Abstract

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.

Integrative trust and innovation on financial performance in disruptive era

“…Observational studies have made evident the fact that ICT companies should create a network with their business partners to support production (Ključnikov¹, et al, 2019;Oláh et al, 2017) and maintain social collaboration (Mura et al, 2015;Oláh et al, 2019b), and to access pivotal resources (Pratono, 2018). More recently, it has been revealed that a social network including trust in partners enhances business performance as a result of reducing external transaction costs (Almășan et al, 2019;Sako, 1992;Sako & Helper, 1998). This finding was…”

Does Multiple Capitals Disclosure Affect the Capital Market? An Empirical Analysis in an Integrated Reporting Perspective

“…Third, investors and non-financial stakeholders such as government officials, policymakers could obtain some insights from the findings of this study, which could help them make better recommendations and decisions. Fourth, IR also brings the transformation of KPIs system of companies from a traditional one that overly focuses on financial performance indicators provided by the financial reporting to a new framed one that concerns the indicators in terms of six capitals ( Albertini, 2019 ; Almăşan et al, 2019 ). Non-financial KPIs are seldomly based on generally accepted accounting principles ( Maniora, 2015 ).…”

Integrated Reporting - A New Management Tool in Analyzing the Performance of a Company

“…However, the changes are not attributable only to integrated reporting; reporting experience is also a contributing factor. [1] Therefore, the relationship between the performance of a company and the IR should be analyzed more carefully, from several perspectives so that the contribution of IR in improving the performance is clearly highlighted, especially since in the framework IIRC are not included a set of indicators that allow, easily, understanding the integrated performance of a company.…”