The effect of national cultural differences of board members on integrated reporting

Abstract

This research, based on stakeholder theory and the national cultural dimensions, aims to test the influence of foreigners on board and its size on Integrated Reporting (IR) practices. The analysis is based on a sample of 1,058 European companies from 18 different countries, who adopted or not the IR for the year 2015, and it relies on a Logit. The dependent variable is a dummy (presenting or not the IR) and the independent variables are represented by the board characteristics (foreigners and size). The impact of the critical mass on the presence of foreigners and the cultural dimension on the basis of directors’ nationality was tested relying on the masculinity/femininity dimension of Hofstede. Besides, the directors’ country of origin was considered, namely if they belong to the major European countries presenting a wider IR diffusion. The relationship between foreigners on board and IR is found to be negative. This means that companies with at least one foreigner are less inclined to adopt IR. The results show that the boards with more of three foreign administrators have a major propensity to adopt the IR. The membership of the directors in countries with a feminist culture also has a positive effect.

Archival research on integrated reporting: a systematic review of main drivers and the impact of integrated reporting on firm value

“…Some researchers assume that greater board size and meeting frequency lead to more discourse and thus to increased board effectiveness. Girella et al (2019), Alfiero et al (2018) and Frias-Aceituno et al (2013b) showed that firms with larger boards are more likely to adopt IR. Meanwhile, Marrone (2020) and Vitolla et al (2020a, d) found a positive impact of board size on IR quality.…”

“…Girella et al, 2019) and foreign diversity (e.g. Alfiero et al, 2018) on IR practices. According to Vitolla et al, (2020a, d), board diversity and IR quality are positively linked.…”

“…Boards with at least three foreign members have been shown to lead to increased IR adoption (Alfiero et al, 2018), over those with fewer such members. According to Alfiero et al (2018), if the majority of foreign board members comes from countries showing a higher femininity orientation, IR adoption is also increased. Yet Frias-Aceituno et al (2013b) did not find any link between foreign board diversity and IR adoption.…”

Moderating Influence of Idiosyncratic Diversity on the Relationship between Accounting Ethics and Financial Reporting Quality

“…Extant literature is replete with positive findings on intra-national diversity management and financial reporting quality (Hoang et al, 2015;Labelle et al, 2010) The relationship between cross-national diversity management and financial reporting quality is mixed. While some are positive and significant (Chung, 2017;Hashim, 2012;Lainez & Callao, 2000), there also exists a report of negative relationships (Alfiero et al, 2018).…”