Impact of Integrated Reporting on Information Asymmetry: Evidence from Sri Lanka

Abstract

Considering the dearth of empirical evidence on the impact of integrated reporting (IR) on information asymmetry in developing countries, this paper investigates the impact of IR on information asymmetry in Sri Lanka. A paired sample t-test and a panel regression analysis are employed to draw empirical evidence. Information asymmetry is proxied by earnings forecast error, earnings forecast dispersion, and cost of equity capital, whereas firms' IR level is measured using the IR framework. Findings indicate a significant reduction in information asymmetry upon adopting IR. Further, they reveal that the level of IR has a feeble but statistically significant negative impact on the cost of equity capital. Earnings forecast error and forecast dispersion do not indicate significant associations with IR levels. Given the substantial cross-country differences, this paper offers a better understanding of the impact of IR on information asymmetry from a developing country setting where the adoption of IR is voluntary.

Transitioning to Zero Hunger

“…Sri Lankan traditional diets are richly diverse (Weerasekara et al 2018) and offer various health and nutritional benefits, including protection from noncommunicable diseases (NCDs) and micro nutrition deficiencies. As well, Sri Lanka is an island rich in biodiversity and has approximately identified 3368 plant species belonging to 1294 genera and 132 families (Rajapaksha 1998). About 800 plants are endemic to Sri Lanka (Rajapaksha 1998).…”

“…As well, Sri Lanka is an island rich in biodiversity and has approximately identified 3368 plant species belonging to 1294 genera and 132 families (Rajapaksha 1998). About 800 plants are endemic to Sri Lanka (Rajapaksha 1998). Many of these plants have been used in the past to build a healthy rural community under the precise guidance of local traditional healers, elders, and indigenous communities.…”

“…Source: Authors' compilation based on data fromRajapaksha (1998);Jayaweera (1980); Source: Authors' compilation based on data fromRajapaksha (1998);Jayaweera (1980); Source: Authors' compilation based on data fromRajapaksha (1998);Jayaweera (1980);Lanka (2009); Biodiversity for Food and Nutrition (2018).…”