Corporate reporting behavior: Factors influencing the adoption of integrated reporting in India
- Author(s)
-
DOIhttp://dx.doi.org/10.21511/ppm.22(2).2024.35
-
Article InfoVolume 22 2024, Issue #2, pp. 453-462
- 173 Views
-
36 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Corporations have a responsibility to provide a fair view of their financial state to their stakeholders. To facilitate the reporting process, the IFRS recommends the integrated reporting framework, which firms may may adopt voluntarily. This study examines the motivations of management in voluntarily disclosing capitals-related information in annual reports of companies listed on the Nifty Metal Index and their willingness to adopt the IR framework. It also empirically investigates how a company’s long-term and short-term goals impact integrated reporting adoption. The Integrated Reporting Capitals Index (IRCIN) was constructed to study the reporting behavior of companies within the specified framework. The reporting patterns within the metal industry are analyzed by employing the fixed effects model. Results highlight the interconnectedness of financial and non-financial capital dimensions in corporate reporting practices, albeit with a strong emphasis on financial capital. The average word count describing the financial capital was high, while the intellectual capital was the lowest. Strategic management evaluated via cash flow from investing activities proved statistically significant at the 5% level. Similarly, short-term goals indicated by profit after tax were found to play a crucial role in encouraging corporations within the Nifty Metal Index to adopt the integrated reporting framework. Conversely, book value per share exhibited a negative coefficient, indicating a historical disconnect with the reporting entities. These insights suggest that the adoption of the integrated reporting framework by management is driven by strategic goals, short-term objectives, and overall company performance.
- Keywords
-
JEL Classification (Paper profile tab)D22, M41, M48
-
References39
-
Tables5
-
Figures0
-
- Table 1. Combined average word count of capitals 2020–2023
- Table 2. Descriptive statistics
- Table 3. Correlation of six capitals and IRCIN
- Table 4. Correlation of dependent and independent variables
- Table 5. Fixed effects model
-
- Albitar, K., Hussainey, K., Kolade, N., & Gerged, A.M. (2020). ESG disclosure and firm performance before and after IR: The moderating role of governance mechanisms. International Journal of Accounting & Information Management, 28(3), 429-444.
- Almășan, A., Circa, C., Dumitru, M., Gușe, R. G., & Mangiuc, D. M. (2019). Effects of integrated reporting on corporate disclosure practices regarding the capitals and performance. Amfiteatru Economic, 21(52), 572-589.
- Anifowose, M., Abang, S., & Zakari, M. A. (2020). Integrated capitals reporting and companies’ sustainable value: Evidence from the Asian continent. Asian Review of Accounting, 28(4), 567-589.
- Ashforth, B. E., & Gibbs, B. W. (1990). The double-edge of organizational legitimation. Organization Science, 1(2), 177-194.
- Baboukardos, D., & Rimmel, G. (2016). Value relevance of accounting information under an integrated reporting approach: A research note. Journal of Accounting & Public Policy, 35(4), 437-452.
- Barth, M. E., Cahan, S. F., Chen, L., & Venter, E. R. (2017). The economic consequences associated with integrated report quality: Capital market and real effects. Accounting, Organizations and Society, 62, 43-64.
- Bontis, N., Chua Chong Keow, W., & Richardson, S. (2000). Intellectual capital and business performance in Malaysian industries. Journal of Intellectual Capital, 1(1), 85-100.
- Brummet, R. L., Flamholtz, E. G., & Pyle, W. C. (1968). Human resource measurement – A challenge for accountants. The Accounting Review, 43(2), 217-224.
- Camilleri, M. A. (2017). The integrated reporting of financial, social and sustainability capitals: A critical review and appraisal. International Journal of Sustainable Society, 9(4), 311-326.
- Campbell, D., Craven, B., & Shrives, P. (2003). Voluntary social reporting in three FTSE sectors: A comment on perception and legitimacy. Accounting, Auditing & Accountability Journal, 16(4), 558-581.
- Cerbone, D., & Maroun, W. (2020). Materiality in an integrated reporting setting: Insights using an institutional logics framework. The British Accounting Review, 52(3), Article 100876.
- Cho, H. Ch. (2023). Financial and non-financial disclosure. As a future shareholder, would you pay? If so, how much more or less? In A. Zicari & T. Gamble (Eds.), Responsible Finance and Accounting (1st ed.). Routledge.
- Dilling, P. F. A., & Caykoylu, S. (2019). Determinants of companies that disclose high-quality integrated reports. Sustainability, 11(13), Article 3744.
- Dimes, R., De Villiers, Ch., & Chen, L. (2023). How integrated thinking can be detected in management disclosures in annual reports: Insights from a large-scale text-analysis approach. Journal of Management Accounting Research, 35(3), 75-99.
- Fama, E. F. (1990). Stock returns, expected returns and real activity. Journal of Finance, 45(4), 1089-1108.
- Fama, E. F., & French, K. R. (1992). The cross-section of expected stock returns. The Journal of Finance, 47(2), 427-465.
- Farneti, F., Casonato, F., Montecalvo, M., & de Villiers, C. (2019). The influence of integrated reporting and stakeholder information needs on the disclosure of social information in a state-owned enterprise. Meditari Accountancy Research, 27(4), 556-579.
- Farooq, M. B., & Maroun, W. (2017). Why organizations voluntarily report-institutional theory and institutional work. In Ch. Villiers & W. Maroun (Eds.), Sustainability accounting and integrated reporting (1st ed., pp. 36-48). Routledge.
- Guthrie, J., & Petty, R. (2000). Intellectual capital: Australian annual reporting practices. Journal of Intellectual Capital, 1(3), 241-251.
- Hoque, M. E. (2017). Why company should adopt integrated reporting? International Journal of Economics and Financial Issues, 7(1), 241-248.
- International Federation of Accountants (IFAC). (2015). Materiality in
: Guidance for the preparation of integrated reports. - International Federation of Accountants (IFAC). (2022, September 27). The growing momentum for integrated reporting: Part 1.
- Jensen, J. C., & Berg, N. (2012). Determinants of traditional sustainability reporting versus integrated reporting. An institutionalist approach. Business Strategy and the Environment, 21(5), 299-316.
- Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305-360.
- Kamath, G. B. (2021). Corporate governance and intellectual capital disclosure. International Journal of Learning and Intellectual Capital, 18(4), 365-398.
- Mähönen, J. (2020). Integrated reporting and sustainable corporate governance from European perspective. Accounting, Economics, and Law: A Convivium, 10(2), Article 20180048.
- Malola, A., & Maroun, W. (2019). The measurement and potential drivers of integrated report quality: Evidence from a pioneer in integrated reporting. South African Journal of Accounting Research, 33(2), 114-144.
- Navarrete-Oyarce, J., Moraga-Flores, H., Gallegos Mardones, J. A., & Gallizo, J. L. (2022). Why integrated reporting? Insights from early adoption in an emerging economy. Sustainability, 14(3), Article 1695.
- Nistor, C. S., Stefanescu, C. A., Oprisor, T., & Crisan, A. R. (2019). Approaching public sector transparency through an integrated reporting benchmark. Journal of Financial Reporting and Accounting, 17(2), 249-270.
- Omran, M. A., & El-Galfy, A. M. (2014). Theoretical perspectives on corporate disclosure: A critical evaluation and literature survey. Asian Review of Accounting, 22(3), 257-286.
- Schwartz, S. H. (2007). Basic human values: theory, methods, and application. Risorsa Uomo, 2007(2), 261-283.
- Schwert, G. W. (1990). Stock returns and real activity: A century of evidence. Journal of Finance, 45(4), 1237-1257.
- Sofian, S., Rasid, S. Z., & Mehri, M. (2011). Effect of conservatim of intellectual capital (ex ante) and conservatism of earnings (ex post) on relevance of earnings. Australian Journal of Basic and Applied Sciences, 5(9), 1837-1840.
- Stewart, T. A. (1997). Intellectual capital: The new wealth of the organization. New York: Doubleday Currency.
- van Zijl, W., Wöstmann, C., & Maroun, W. (2017). Strategy disclosures by listed financial services companies: Signalling theory, legitimacy theory and South African integrated reporting practices. South African Journal of Business Management, 48(3), 73-85.
- Venugopala Rao, K.P., Ibrahim, F., & Tadi, M. S. (2023). Value relevance of financial information: A comparative study of pre-and post-implementation of Indian accounting standards. Investment Management and Financial Innovations, 20(1), 68-76.
- Vitolla, F., Raimo, N., & Rubino, M. (2020). Board characteristics and integrated reporting quality: An agency theory perspective. Corporate Social Responsibility Environmental Management, 27(2), 1152-1163.
- Wen, X. (2011). Voluntary disclosure and investment. Contemporary Accounting Research, 30(2), 677-696.
- Xu, Ch., & Hu, J. (2023). Does China’s Belt and Road Initiative improve financial reporting quality? Finance Research Letters, 58, Article 104628.
-
Industrial development in Saudi Arabia: disparity in growth and development
Anis Ali
doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
Problems and Perspectives in Management Volume 18, 2020 Issue #2 pp. 23-35 Views: 2956 Downloads: 1005 TO CITE АНОТАЦІЯIndustrial development in any nation plays a vital role in the strengthening of the economy and employs human resources as per specifications and directly towards the mainstream of the nation. In Saudi Arabia, there was rapid industrialization for four decades. Some manufacturing industries performed well, while some internal and external business environment factors influenced the others’ performance. The study focuses on historical development, as well as recent trends of well-performing and poor-performing industries of Saudi Arabia. Small manufacturing industries in Saudi Arabia are underdeveloped and need more attention to attain sustainable and progressive growth rate in the form of the number of establishments to enjoy the potential. Manufacture of tobacco, computer, electronics and optics, pharmaceuticals and transport equipment are the deprived and underdeveloped industries of the manufacturing sector. There should be some easy credit schemes for the development of deprived or underdeveloped manufacturing industries. To attain sustainable growth and development of the manufacturing sector, a positive attitude of the government towards underdeveloped manufacturing industries, favorable labor laws, and entrepreneurial awareness, technical and financial assistance are necessary. The growth and development of the manufacturing sector of Saudi Arabia will be helpful in the attainment of goals of Vision 2030.
-
Why banks should consider ESG risk factors in bank lending?
Sarwar Uddin Ahmed ,
Samiul Parvez Ahmed ,
Ikramul Hasan
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
Banks and Bank Systems Volume 13, 2018 Issue #3 pp. 71-80 Views: 2794 Downloads: 1124 TO CITE АНОТАЦІЯWhy banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.
-
Integrated reporting and financial performance of South African listed banks
Reon Matemane ,
Rozane Wentzel
doi: http://dx.doi.org/10.21511/bbs.14(2).2019.11
Banks and Bank Systems Volume 14, 2019 Issue #2 pp. 128-139 Views: 2743 Downloads: 536 TO CITE АНОТАЦІЯThe recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.
