Background: Ten years have lapsed since the launch of the International Integrated Reporting Council. Stakeholders increasingly question whether integrated reporting (IR) meets the objectives of decision-usefulness and accountability.Aim: The primary objective of this study was to assess the usefulness of IR by examining the interrelations between the integrated reporting quality (IRQ), sustainability performance and financial performance of listed companies in South Africa.Setting: The study is conducted in the country where integrated reporting is most established. The links between the IRQ of the Top 100 companies listed on Johannesburg Stock Exchange and their environmental, social and corporate governance (ESG) scores and multiple financial indicators are investigated over the period 2013 to 2018.Method: The EY Excellence in Integrated Reporting Awards was used as a metric to determine the sample companies’ IRQ. These awards were ranked according to four categories, namely ‘progress to be made’, ‘average’, ‘good’ and ‘excellent’. Sustainability (ESG scores) as well as financial performance data (accounting-based and market-based variables) were sourced from Bloomberg. The panel dataset was analysed by conducting a mixed-model analysis of variance and panel regressions.Results: A high level of IRQ was found to be significantly associated with high levels of environmental, social and corporate governance performance, as well as high earnings per share and high leverage.Conclusion: IR appears to strengthen managerial efficiency and legitimacy in the eyes of debt capital providers in South Africa, while equity capital providers do not provide a clear signal of approval.
Orientation: Diverging views on the relevant content and target audiences of financial and non-financial reporting have caused a proliferation of reporting standards. This has led to calls for integration and convergence in approaches.Research purpose: Wide-ranging findings have been reported on the drive behind and consequences of integrated reporting (IR). Theoretical perspectives used to review financial and non-financial corporate reporting were critically compared to propose a cross-cutting theoretical view on IR, thereby enhancing multidisciplinary dialogue.Motivation for the study: Integrated reporting has pointed to fragmentation in corporate disclosures. The call for integrated thinking also exposes not only divergent reporting approaches but also a gap between two main schools of thought in accounting research and theory.Research approach/design and method: A critical literature review was conducted, examining scholarly research on IR, practitioner reports and relevant textbooks to propose a cross-cutting theoretical lens on why and how companies disclose specific information in certain reporting formats.Main findings: Theoretical viewpoints on IR centre on accountability or efficiency. Yet, contrasting conclusions are drawn on the decision usefulness for various target audiences. As such, an aspirational efficiency view is proposed to reconcile accountability and efficiency considerations in future IR investigations.Practical/managerial implications: The refined understanding of reporting efficiency, disclosure quality and key users sheds light on reporting ideologies that idiomatically ‘talk past one another’. The proposed theoretical view can be applied in future research on how IR strategically integrates diverse information sets.Contribution/value-add: The proposed theoretical view builds on components of theories applied in corporate reporting research to conjunctively account for accountability and efficiency.
What does it take for life cycle management (LCM) to capture the attention of the fi nancial community? LCM experts face a window of opportunity as technological progress and economic developments lead to greater interest in mainstreaming the sustainability agenda and integrating it in business decision-making. This includes new approaches to the assessment of impacts on Natural Capital, environmental management as well as annual corporate reporting. Having highlighted these, this chapter employs a Green Business Case Model to defi ne ways in which life cycle applications can be employed to link with core fi nancial indicators of special interest to investors. It describes three hypotheses to illustrate where LCM tools can best make a difference, positively affecting core fi nancial value drivers. The author suggests three hypothetical pathways to capture the attention of investors, linking environmental life cycle costing (LCC) and fi nancial, activitybased costing. These are complemented with company case examples. It draws lessons from past work on the business case as well research on environmental versus fi nancial life cycle costing (LCC).
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