Structure of Integrated Reporting, Voluntary Disclosure and Firm-Specific Characteristics in Saudi Arabian Companies

Abstract

The present study aims towards three research purposes. Firstly, it intends to reveal the pattern that associates the elements of the Integrated Reporting (IR) of companies listed on the Saudi Arabian Stock Exchange (Tadawul). Secondly, it verifies the existence of a relationship between IR practices and some firm-specific characteristics. Third, it examines the similarities between the IR practices of these companies. IR communicates how an organization's strategy, governance, performance, and prospects lead to value creation. The dataset used for the IR elements is retrieved from Tadawul and consists of data regarding integrated reports for 126 companies listed in 2019; while the data for the firm-specific characteristics, as the size of the company, the auditor type and the type of company are extracted from Marketscreener.com and Argaam.com portals. The methodology used consists of the empirical-analytical approach with the use of Optimal Scaling techniques. Main findings consist of a positive association found between the elements of the IR, as well as that the specific characteristics of the firms are not related to the elements of the IR. In our results a dissimilarity is found in the corporate information disclosure practices. These findings reveal a need for a deep investigation of the IR elements and firm characteristics in Saudi Arabian companies. One of the future research direction is a multilinear data for various years such that can reveal a more comprehensive understanding of IR elements and firm characteristics. This study becomes relevant in the context of IR elements and firm characteristics relations, that are not yet studies at their research potential.

Relationship between Corporate Information Disclosure and Financial Performance in Saudi Arabia

“…The GLM procedure estimated that the effect size of the corrected model on Jensen (F = 1.887, p < .05) was significant at the 95% confidence level, as shown in Table 3. The data used to apply this model are available from Hariri (2021).…”

“…In contrast, firms listed in Tadawul are not homogeneous in their voluntary disclosure practices (Hariri, 2021), as each, in its corporate report, emphasizes those aspects of the IR that are of particular interest to it. Therefore, the model calculates the effect of conglomerates of firms grouped according to their disclosure practices on financial performance measures.…”

“…In total, 45 items were established and distributed among the six elements of the IR: organizational overview and perspectives (six items), governance (six items), business model (seven items), risk and opportunities (12 items), strategy and resource allocation (seven items), and performance (seven items). These items were disclosed in Hariri (2021). The measurement, which consisted of verifying whether each item was disclosed in the corporate reports of the surveyed companies, was recorded on a dichotomous scale of two mutually exclusive categories: 1 = not disclosed and 2 = disclosed.…”

“…In the last two decades, companies have faced growing demand to adopt policies related to social, environmental, and governance (ESG) issues (Hariri, 2021). Culture and society are questioning business organizations' emphasis on producing money, as this approach is limited and ignores the creation of value and justice for people, society, and the world (Dumay, Bernardi, Guthrie, & Demartini, 2016).…”

The Effect of Firm Size, Profitability, Leverage, and Financial Distress on Voluntary Disclosure in Annual Report

“…The amount of information submitted in the annual financial statements will increase along with the increase in company size, because large companies tend to have more information needs and demands from external parties than small companies (Putri, 2020). According to (Hariri, 2021) large companies experience greater demands in conveying broad disclosures because they are more visible in the capital market and the wider community.…”