The Level of European Companies’ Integrated Reports Alignment to the <IR> Framework: The Role of Boards’ Characteristics

Abstract

In terms of corporate governance, the board of directors (BoDs) is the main responsible structure in meeting and safeguarding both shareholders and stakeholders’ interests. Integrated reporting’s primary aim is to improve information quality provided to shareholders while responding to stakeholders’ interests and needs. Using lenses of stakeholder theory, this study explores the relationship between board of directors’ characteristics as size, gender diversity, activity, tenure, outside directors, chief executive officer (CEO) duality and the Integrated Reports alignment level to the International Integrated Reporting Committee (IIRC) framework, using a self-constructed disclosure index. Applying a content analysis method, data were collected from integrated reports to determine the self-constructed disclosure index (Integrated Reporting Score—IRS). Through quantitative analysis, we analyzed which BoDs’ characteristics are correlated to IRS. The analyzed sample was formed of 98 integrated reports produced by 61 European companies, published on the IIRC website for the period 2013–2017. The current study contributes to existing knowledge by exploring the voluntary adoption of integrated reporting using quantitative analysis and focusing on the European context. The obtained results highlight that integrated report alignment levels with IIRF is directly correlated with the proportion of outside directors on the board and longer board tenure. Results show a higher alignment for reports produced by two-tier or mixed boards than the unitary ones. Additionally, there is a constant improvement in alignment score, with a statistical difference occurring in 2016 compared to 2013.

Disclosure Dynamics and Non-Financial Reporting Analysis. The Case of Romanian Listed Companies

“…Various studies [37][38][39][40][41] have been conducted on companies that represent examples of good practice in terms of their flexibility to adapt to responsible corporate reporting requirements. Several reports are published on the websites of representative bodies [2,9]. One can notice a constant improvement of the reports of these companies, whether it is an alignment with GRI Standards [2] or compliance to the International Integrated Reporting Committee (IIRC) framework [9].…”

“…Several reports are published on the websites of representative bodies [2,9]. One can notice a constant improvement of the reports of these companies, whether it is an alignment with GRI Standards [2] or compliance to the International Integrated Reporting Committee (IIRC) framework [9].…”

“…At the same time, the International Integrated Reporting Council developed the International Integrated Reporting Framework as a support for the development of an integrated report. While traditional corporate reporting contains numerous reports, not connected and static, integrated reporting focuses on the process of creating company value over time, bringing together financial and non-financial information [9]. At the same time, De Lucia [6] observed that the changing behavior of companies receptive to the sustainability problems of the global community and the availability of environmental, social, and governance indicators in their reports, attract investors to socially responsible investment decisions.…”

“…Exploring the sustainability performances of companies using environmental, social, and governance scores was done by several researchers [2,3,9,10,41,64,65]. Used in addition to the financial score, the use of these scores increases accuracy in assessing performance and risk [64].…”

“…In Europe, the EU Directive 2014/95/EU [8] requires certain companies and large groups to provide non-financial and diversity information. However, the regulation does not indicate any framework to be used by companies for corporate and non-financial reporting [9], its adoption increases the use of this reporting [2,[10][11][12]. The impact of this directive is felt in Romania, through the publication of Order of the Ministry of Public Finance (Order) 1938/2016 [13] in response to the alignment of national regulation with the European one.…”