No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Empirical evidence of the disclosure and assurance of Integrated Reporting - A content analysis of the IIRC Examples Database
Abstract
After the financial crisis 2008/09, the limitations of corporate social responsibility (CSR) reporting were criticized internationally. Thus, the need of connectivity of financial and non-financial information within an integrated report according to the framework of the International Integrated Reporting Council (IIRC) has significantly increased. Our analysis illustrates to what extent integrated reporting is being applied in current business practice. Therefore we analyse all integrated reports provided on the website of the IIRC Examples Database with a special focus on reporting entities located in member states of the European Union. Our content analysis illustrates a huge importance of the voluntary implementation of integrated reporting within the European Union member states and an increased demand for integrated reporting assurance. The external verification is regularly based upon a reasonable assurance level. Furthermore, a lack of key elements and reporting principles of the IIRC framework (reliability & completeness, consistency & comparability) can be found. Insofar, the decision usefulness of integrated reporting practice has to be enhanced in the future.
... Assurers can include Big 4 companies, other professional audit firms, non-governmental organizations, stakeholder panels and academics or specialist consultancies (Burke and Clark, 2016;Maroun, 2019). Because the IIRC has issued only two discussion papers on the assurance of integrated reports but provides no standard on the assurance process (Corrado et al., 2019;IIRC, 2013IIRC, , 2014a, assurance providers apply the same assurance standards used for the assurance of sustainability reports (Dumitru and Guse, 2016;IFAC/IFRS, 2021;Stawinoga and Velte, 2017). These standards include the International Standards for Assurance Engagements 3000 (ISAE 3000) and the AccountAbility 1000 Assurance Standard (AA1000AS) [5]. ...
... The AA1000AS does not describe any mandatory assurance work steps, similar to ISAE 3000 (AccountAbility, 2008;Rossi et al., 2020). Overall, companies can adjust the assurance process for their integrated reports according to their cost-benefit considerations (Caglio et al., 2020;Stawinoga and Velte, 2017). ...
... On the one hand, assurance risk consists of an internal component that is not under the control of the external assurer but is influenced by the inherent risk of the disclosures and the effectiveness of internal control mechanisms (Ahmed Haji and Anifowose, 2016a;Wang et al., 2020). On the other hand and this is the focus of this paper, assurance risk is also influenced externally by the assurance process (e.g. the work steps undertaken or the assurance level) that is negotiated between the assurer and the reporting company (Goicoechea et al., 2019;Stawinoga and Velte, 2017). Allowing an assurance risk close to zero enables the assurer to state a high (or reasonable) assurance level, whereas a considerably low assurance risk unequal close to zero results in a moderate (or limited) assurance level [6]. ...
Purpose
Credibility concerns regarding integrated reports can harm the intended decrease of information asymmetry between a firm and its investors. Therefore, it is crucial to examine whether voluntary third-party assurance enhances the credibility of integrated reports and, thus, decreases information asymmetry. Furthermore, this study aims to investigate the interaction effect between assurance quality and the disclosed connectivity of the capitals, a distinguishing feature of integrated reports.
Design/methodology/approach
Content analysis is performed of the 176 assurance statements included in the 269 integrated reports of Forbes Global 2000 firms disclosed from 2013 to 2015 and the 269 integrated reports themselves. Regression analyzes are applied to examine the associations between assurance, the disclosed connectivity of the capitals and information asymmetry.
Findings
The presence of an assurance statement in an integrated report significantly decreases information asymmetry. Surprisingly, assurance quality is not significantly associated with information asymmetry. However, an interaction analysis reveals that combining high assurance quality with high disclosed connectivity of the capitals allows a significant decrease in information asymmetry.
Research limitations/implications
The paper demonstrates that the connectivity of the capitals of integrated reports and assurance quality are connected and together are associated with information asymmetry.
Practical implications
The results imply, both for report preparers and standard setters, that assurance quality is advantageous only when combined with disclosed connectivity of the capitals.
Social implications
More information on non-financial information measured by the connectivity of the capitals of integrated reporting has an interaction effect together with assurance quality on information asymmetry.
Originality/value
This paper builds on a unique data set derived from the contents of integrated reports and accompanying assurance statements. Furthermore, it extends the integrated reporting literature by investigating the interaction between assurance quality and the disclosed connectivity of the capitals, which had not previously been examined in combination.
... There is also a risk that these reports are not effective and instead serve as mere public relations exercises [7,8]. Finally, there is a risk of information overload [29]. ...
... The non-financial statement should contain aspects relating to (at minimum) environmental matters, social and employee-related matters, respect for human rights, anti-corruption, and bribery matters [34,35]. Recent research shows a tendency for companies located within a member state of the EU to replace the independent sustainability report in favor of integrated reporting [29]. Even public sector organizations have begun to adopt integrated reporting in order to improve their accountability [36]. ...
... The credibility of non-financial reports-and therefore of the informing organizations-is enhanced by assurance [16,19,38,41,43,47]. For example, 91% of the reports published by companies located in a member state of the EU and provided in the "Getting Started" section of the Integrated Reporting Example Database were assured by independent third parties [29]. The IIRC has established-in cooperation with Black Sun Plc, a stakeholder communications company-a platform on which English language integrated reports are available, and the database has three central sections, the "Getting Started" section, the "Recognized Reports" section, and the "Integrated Reporting Reporters" section. ...
Integrated reporting is a key instrument used to inform stakeholders about the sustainability issues of a company. Only an assured report can effectively instill confidence in its users regarding the sustainability of the company. Based on the International Integrated Reporting Framework issued by the International Integrated Reporting Council (IIRC), the authors solicited perceptions from auditors and audit report users about several aspects of integrated reporting assurance. An analysis of the responses suggests that integrated reporting assurance is important, but there are many challenges (both methodological and related to the characteristics of non-financial information) for auditors to overcome. Reporting companies and auditors must work to overcome these problems. The former ones must improve the quality of non-financial information and the later must adapt their audit procedures. This paper provides valuable insights into preferences regarding the form and content of the audit report on integrated reporting. This study is useful to regulators of audit activity, auditors’ corporations, the IIRC, and other international associations, academics, and audit report users, and contributes to the current integrated reporting literature by examining the perceptions of auditors and users regarding the assurance of integrated reporting. Integrated reporting assurance is still an under-explored field of research.
... Cuomo et al. (2022) find that the directive generally has led to an increase in transparency and sustainability performance. Before the NFRD was made public, the usefulness of an integrated framework was made easier for companies voluntarily issuing an integrated report (Stawinoga & Velte, 2017). Baumüller and Schaffhauser-Linzatti (2018b) show that despite the expectations of many, with regards to materiality, the reporting requirements of the NFRD are closer to integrated reporting than it is to sustainability reporting. ...
... Baumüller and Schaffhauser-Linzatti (2018b) show that despite the expectations of many, with regards to materiality, the reporting requirements of the NFRD are closer to integrated reporting than it is to sustainability reporting. This finding is in line with Stawinoga et al (2017) who argues that integrated reporting depicts the more realistic implementation because of the quantitative and qualitative requirements of the directive and companies aligning their non-financial information into their financial reporting practices. Given the need to reconcile financial with nonfinancial information, Neumann et al., (2012) argue that the increase Electronic copy available at: https://ssrn.com/abstract=4283860 in total information available might have an adverse effect and hamper the intended positive effects of reporting, from its users perspective as a whole. ...
I employ an unsupervised learning method to investigate the thematic content of a large set of integrated and separate sustainability reports. Subject to a non-financialreporting mandate, companies in the EU are required todisclose their non-financial performance but are free to decide how they do so. I compare 2,248 integrated and 3,567 stand-alonesustainability reports to identify and examine the topicsthat firms disclose when preparing non-financial information. UsingLatent Dirichlet Allocation (LDA), a topic modeling technique, Ishowthat when text corpora are constructed of integrated reports, they are less likely to contain topics concerning environmental and socialmattersand have lower readability scores as measured by common readability metrics. I argue that the differences in disclosure content and textual characteristicsare the result offirms aimingto address specificaudienceswhen preparing their reports. The analysis is of potential interest to regulators and academicswishing to understand the intricacies that arise when firms choose a specific reporting format over the other.
... El informe integrado del IIRC, basado en el pensamiento integrado, aúna información financiera y no financiera en un único reporte conciso que detalla cómo crean valor las empresas a lo largo del tiempo (IIRC, 2021). Existe una tendencia de crecimiento en su uso en la Unión Eu- (Stawinoga & Velte, 2017), entre las empresas del sector público (Biondi & Bracci, 2018) y entre las empresas N100 7 (KPMG, 2017). Además de no determinar un marco de reporting, el formato "clásico" de reporte propuesto en la Directiva no cumple con los requisitos de la regulación de Formato Electrónico Único Europeo ("ESEF" 8 , por sus siglas en inglés) (Dumay & Guthrie, 2017;UE, 2020a). ...
La información sobre sostenibilidad y su credibilidad son objeto de un interés internacional creciente. La actual Directiva 2014/95/UE de información no financiera va a ser sustituida por la Directiva de información corporativa en materia de sostenibilidad con el objetivo de mejorar la comparabilidad, relevancia y credibilidad de la información no financiera reportada en el entorno europeo. En el presente artículo analizamos ambas Directivas, otras iniciativas internacionales en materia de información sobre sostenibilidad, así como la situación presente y futura de la verificación de dicha información. Además, proponemos un informe de auditoría novedoso para la información no financiera basado en una encuesta a auditores y usuarios en España. Nuestra propuesta puede mejorar la comunicación entre auditores y usuarios y favorecer la confianza de los grupos de interés en la información sobre sostenibilidad reportada. Recibido: 30 abril 2022Aceptado: 30 mayo 2022
Using an experimental design, this explorative study provides unique empirical evidence of the effects of an integrated reporting assurance (IRA) on nonprofessional investors’ financial decision-making in a laboratory experiment. For this purpose, two independent experiments were carried out, one relying on a sample of Masters students, and one focusing on managers of large corporations. In line with our agency theoretical reasoning, we find that students value an IRA positively, evidenced through significantly higher investments, while, contrary to expectations, an IRA has the opposite effect for managers. The results reveal that, dependent on the empirical model, an IRA has either no, or even an investment-decreasing, impact on executives. In order to assess the sense-making process underlying this conundrum, subsequent interviews with the managers were carried out which ascertained that this effect is attributable not only to a general disbelief in the decision usefulness of IR to (nonprofessional) investors but also to negative practical experiences with audit and assurance engagements and technical doubts specific to IRA as well as emotional caveats regarding the audit and assurance profession; these shape practitioners’ critical attitudes towards assurance engagements. These findings indicate a prevailing divergence between the extolled theoretical contribution of an IRA to report credibility and its actual nature in practice. In the further course of the investigation, we also find that the assurance provider (Big 4 auditor versus specialized consultant) does not affect investment decisions, but that a higher assurance level leverages investments among students. The results of this study add to the growing, albeit still small, IRA research body and deliver valuable insights for research, regulators, and practice.
Zusammenfassung
Das CSR-Richtlinie-Umsetzungsgesetz erweitert die verbindliche nichtfinanzielle Berichterstattung bei bestimmten großen Unternehmen, Kreditinstituten, Versicherungsunternehmen sowie Genossenschaften. Im Rahmen des Beitrags wird der Prozess der Transformation der Richtlinie 2014/95/EU aufgezeigt sowie die daraus resultierenden Änderungen für die Rechnungslegungspraxis und den Berufsstand der Wirtschaftsprüfer analysiert.
ResearchGate has not been able to resolve any references for this publication.