The impact of integrated reporting on financial performance in India: a panel data analysis

Abstract

PurposeThe study aims to determine the trend of Integrated Reporting (IR) practices and investigates its impact on operational performance (return on assets (ROA)) and firm value (Tobin's Q) of National Stock Exchange (NSE) listed companies in India.Design/methodology/approachManual content analysis is used to construct Integrated Reporting Disclosure Quality Index (IRDQI) to assess disclosure practices of 93 integrated annual reports for three years from 2017–2018 to 2019–2020. Further, panel data models are utilized for investigating the relationship between IRDQI and financial performance. The dependent variable consists of ROA and Tobin's Q in regression models, while the independent variable includes IRDQI.FindingsThe empirical analysis results show that IRDQI is positively and significantly associated with operational performance (ROA) while insignificantly related to firm value (Tobin's Q). The study also reveals the upward trend of IR elements and guiding principles from 2017–2018 to 2019–2020.Research limitations/implicationsThe primary limitation of this study is the scarcity of data as a handful of companies are preparing IR in India. This paper considers two profitability measures, i.e. ROA and Tobin's Q. Future research should consider both long-term and short-term profitability measures to represent the progress of IR in India.Practical implicationsThe escalation of IR disclosures represents that Indian companies are utilizing the opportunities offered by IR to meet stakeholders' expectations. Further, the study investigates the financial performance of Indian companies, which is essential for the growth and survival of the companies. The study's findings would enhance the capacity of firms to raise capital from capital markets by enticing investors.Originality/valueThis study contributes to the limited literature of IR disclosure and financial performance in India by employing content analysis and regression analysis. The organizations could utilize the unique IR index constructed in the Indian context to scrutinize their IR practices.

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

“…However, year-wise, samples differ as all companies have not published integrated reports every year since the publication of integrated reports is voluntary in Sri Lanka. Therefore, this study has used an unbalanced panel which is consistent with Frias-Aceituno et al ( 2013), Rossignoli et al (2021), and Soriya and Rastogi (2022) who also faced the same issue in their studies conducted in contexts where IR is voluntary. The gathered data were analysed using the EViews software.…”

“…Even though year-wise samples vary (i.e., some companies have issued integrated reports during all 6 years, while others have not issued), overall, 93 companies have issued integrated reports at least 1 time during the post IR period. Since the sample size is more than 50, it is sufficient for conducting a regression analysis (Soriya & Rastogi, 2022;VanVoorhis & Morgan, 2007). The pre-IR period was also chosen as 6 years prior to the post-IR period (i.e., 2007/2008-2012/2013) for comparison.…”

Voluntary Disclosures and their Drivers: A Study of MDA Reports in India

“…The stakeholder theory and signaling theory are major theories that have been used in this study as the objectives of this study are closely related to these two theories. The stakeholder theory explains the actions of the company's executives to fulfill the informational demands of the stakeholders (Erin & Adegboye, 2022;Mishra et al, 2022;Soriya & Rastogi, 2022). This theory focuses on the two-way relationship between the stakeholders and the company's executives.…”

“…As a result, a new MD&A disclosure index (MDADI) needs to be developed to ascertain the quality of the MD&A index in the context of developing economies. A manual content analysis technique is applied to measure the quality of the MD&A disclosures in the quantitative form (Botosan, 1997;Laskar & Maji, 2016;Aggarwal & Singh, 2019;Saha & Kabra, 2022;Soriya & Rastogi, 2022). Such index tool will be used to ascertain the voluntary disclosure score, which is further used to establish the relationship with the firm characteristics.…”

A multi-criteria based analytic framework for exploring the impact of Covid-19 on firm performance in emerging market

“…Hence, we consider Tobin’s Q as a measure of ES in this work wherein higher is the value of Q, better is the sustainability and log-term prospect of the organization. The Tobin’s Q value is calculated [131] , [132] follows.…”