Voluntary versus mandatory non-financial disclosure

Abstract

Purpose The recent European Union Directive 95/2014 enforced a radical shift from voluntary to mandatory disclosure of non-financial information. Given radical changes in reporting practices, there is an urgent need to assess the firms’ attitude to disclose non-financial information regarding the new requirement. This paper aims to investigate whether the quantity and quality of non-financial information, voluntarily disclosed in the years before the directive came into force, were linked to the level of compliance. Design/methodology/approach Selecting a sample of 60 Italian companies from the obliged entities, the authors carried out a manual content analysis on corporate reports and developed some research hypotheses to explore if their sustainability practices can affect non-financial disclosures required by the Italian adoption of the European directive (i.e. Legislative Decree 254/2016). Findings Evidence showed that prior skills and competencies in non-financial reporting made a significant contribution especially regarding to the presence of business model, but further efforts are expected to improve the quality of non-financial reports. Practical implications This study yields an initial assessment of the implementation of the European directive in Italy. It may, therefore, help policymakers to identify ways to improve the harmonization of reporting practices. Preparers can also be supported in choosing different positioning of reporting on non-financial information. Originality/value This research provides interesting insights into the ex ante and ex post adoption of the European directive by investigating how Italian companies are reacting to regulatory and institutional requirements. One of the main problems remains the lack of a shared understanding of the term “non-financial”, which can make the communication process difficult and unclear.

Sustainability Performance Indicators and Non-Financial Information Reporting. Evidence from the Italian Case

“…However, the "legislation driven" approaches to CSR reporting (Adams 2004;Bebbington et al 2012) have repeatedly stressed that improvements in the quality of NFI disclosure and on the sustainability commitment of companies cannot be achieved only through mandatory provisions. With reference to the Italian case, numerous studies have evaluated the information gap for Italian companies and, consequently, the adjustment required by the adoption of the Directive with reference to information disclosed by companies before the adoption of the law (Venturelli et al 2017;Carini et al 2018;Manes-Rossi et al 2018;Doni et al 2019). Mion and Adaui (2019) analyzed the contents of NF reports drawn up by Italian and German companies and have documented significant differences in the SRs quality before and after the entry into force of Directive 95/2014.…”

“…However, the first research on the adoption of Directive 2014/95/EU in Europe is showing contradictory results, especially on the issue of whether mandatory reporting guarantees an increase of the level of NFI disclosed (Luque-Vilchez and Larrinaga 2016; Lock and Seele 2016; Habek and Wolniak 2016;Mion and Adaui 2019). With reference to Italian companies, numerous studies have evaluated the information gap and, consequently, the adjustment required by the adoption of the Directive with reference to information disclosed by companies before the adoption of the law (Venturelli et al 2017;Carini et al 2018;Manes-Rossi et al 2018;Doni et al 2019). Mion and Adaui (2019) have analyzed the contents of NF reports drawn up by Italian and German companies, and have documented significant differences in the SRs quality before and after the entry into force of Directive 95/2014.…”

Do investors value companies' mandatory nonfinancial risk disclosure? An empirical analysis of the Italian context after the EU Directive

“…In Italy, the EU Directed was implemented through Decree 254/2016 (hereafter, the Decree) adapting it to the context (Caputo, Leopizzi, & Pizzi, 2020;Doni, Bianchi Martini, Corvino, & Mazzoni, 2019;Mion & Loza Adaui, 2019;Muserra, Papa, & Grimaldi, 2019); The 2017 fiscal year was the first year of its application. In the same way as the EU Directive, Decree 254 does not specify how to report NFI, and by extension NF risks, but it does provide a way to relate NF risks (art 3, subsection 3) to the NF issues (art 3, subsection 1).…”

Integrated Reporting and European State-Owned Enterprises: A Disclosure Analysis Pre and Post 2014/95/EU

“…On a national level, Sierra-Garcia et al [29] investigated the application of the EUD in the case of Spanish companies, and Tiron-Tudor et al [30] analysed the change brought by the EUD on non-financial information by Romanian listed companies, for the year previous and after the entry into force of the regulation. Moreover, Venturelli et al [6] analysed the readiness of large, Italian organisations' reports for the upcoming EUD, while Doni et al [31] explored the quality of non-financial reports in relation to compliance toward the EUD, in the case of Italian companies foreseen by the entrance into force of the Directive. Furthermore, from a comparative perspective, Venturelli et al [32] compared the compliance levels toward the EUD provided by Italian and British companies.…”