The non-financial reporting practices of Hungarian listed public interest entities considering the 2014/95/EU Directive

Abstract

PurposeThis paper aims to investigate the non-financial reporting (NFR) practices of Hungarian listed public interest entities for 2016–2018 in terms of the required disclosure content based on the 2014/95/EU Directive (ED).Design/methodology/approach The authors apply content analysis methodology on Hungarian firms subject to mandatory reporting under the ED. The target variable in the multivariate model is the reporting quality (Qi) measured by a combined index.Findings The authors find that the ED had a moderate impact on Hungary's reporting quality because the overall disclosure of the sample only increased from low to medium level. The authors found that the value of intangible assets is a determinant of the reporting quality before and after the implementation of the ED. The findings support the effect of coercive isomorphism on Hungarian NFR practices.Research limitations/implications The limitation of the research is the number of firms examined. However, the authors covered the entire (non-bank) community of the Hungarian firms subject to the ED.Practical implications The authors suggest that reporting entities build upon the synergy between intellectual capital disclosure and NFR when elaborating their reporting strategies. The authors recommend the integration of ethical matters into corporate strategies and policies. Policymakers may consider the revision of the Hungarian regulations. The authors suggest academics embrace these topics in teaching.Originality/value To the best of the authors’ knowledge, this is the first study that investigates the impact of ED in the context of Hungary. The authors contribute to the existing literature by adding the results of the ridge regression model, highlighting the importance of intangible assets.

Does the Directive of the European Union on disclosure of non-financial and diversity information improve reporting?

“…The aim of our investigation was to determine whether ED improved the reporting of nonfinancial and diversity information. Our study revealed a statistically significant improvement in reporting, which confirms not only our hypothesis H1, but also the first empirical findings regarding the effect of ED on particular member states, sectors or specific disclosure requirements and the trend toward improvement in disclosure identified therein (Caputo et al, 2019;Mion and Loza Adaui, 2019;Agostini et al, 2021;Korca et al, 2021;Matuszak and R ozanska, 2021;Posadas and Tarquinio, 2021;Carmo and Ribeiro, 2022;Lippai-Makra et al, 2022). However, in line with our hypothesis H2, the improvement is not evident in all information categories.…”

“…Lippai-Makra et al (2022) investigated the impact of the directive on Hungarian companies and found a moderate improvement in quality. In the same year, Carmo and Ribeiro (2022) also reported a positive impact on reporting due to the directive in their study of listed Portuguese companies.…”

“…Moreover, several studies have already examined the effects of ED (Caputo et al, 2019;Mion and Loza Adaui, 2019;Nicolò et al, 2020;Agostini et al, 2021;Korca et al, 2021;Matuszak and R ozanska, 2021;Posadas and Tarquinio, 2021;Carmo and Ribeiro, 2022;Lippai-Makra et al, 2022). However, all such studies analyze the effects of the directive only in selected countries or sectors, or only consider a specific aspect of the directive.…”

How does the European Green Deal affect the disclosure of environmental information?

“…Several authors highlight the influence of the characteristics of the company (size and activity sector) and the particularities of each country's regulatory framework on the degree of response to regulation (Caputo et al, 2020;Ferrer et al, 2020;García-Benau et al, 2022;Sierra-Garcia et al, 2018). It has also been observed that the existence of previous legislation at the national level on disclosure of environmental information and the previous experience of the company in disclosure of information on sustainability affect compliance with Directive 2014/95/EU (Carmo & Ribeiro, 2022;García-Sánchez, Sierra-García, & García-Benau, 2022;Lippai-Makra et al, 2022;Mion & Loza Adaui, 2019;Posadas & Tarquinio, 2021). Future studies could address these aspects.…”

Guest editorial Rethinking non-financial reporting in Europe: challenges and opportunities in revising Directive 2014/95/EU

“…Lippai-Makra et al (2022) evaluated the effects of the Directive 2014/95/EU in Hungaria. Adopting a theoretical framework used in previous studies about non-financial reporting in Europe, the authors collected interesting insights about non-financial regulation in developing countries.…”