Integrated reporting and financial performance of South African listed banks

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The 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.

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    • Figure 1. Line plots for financial performance of the banks over the period 2004–2014
    • Figure 2. Line plots for integrated reporting quality of the banks over the period 2010–2014
    • Table 1. Descriptive statistics of the panel data for financial performance of the banks
    • Table 2. Descriptive statistics of the integrated reporting quality of the banks
    • Table 3. Parameter estimates of the FGLS models
    • Table 4. Descriptive statistics of the banks’ performance before and after integrated reporting