Does Structural Capital Affect SDGs Risk-Related Disclosure Quality? An Empirical Investigation of Italian Large Listed Companies

Abstract

In a context of widespread acceptance and implementation of the United Nations Sustainable Development Goals (SDGs), this paper discusses the possible relationship between intellectual capital (IC) and nonfinancial information (NFI), particularly related to SDGs and corporate social responsibility (CSR) in a stakeholder engagement perspective. Prior studies called for further investigation about nonfinancial risk disclosure and claimed that companies mandated to disclose risk-related information tend to focus mainly on financial risks. Therefore, given the growing attention of regulators to the content of mandatory companies' NFI brought to the Directive 2014/95/EU, this study intends to contribute to fill this literature gap by investigating the drivers of risk-related disclosure quality (RDQ) and to what extent it could be affected by the structural capital (SC), as one of the components of IC. The empirical analysis is based on a sample made of 51 Italian large undertakings and groups. The study uses content analysis to assess the RDQ from firms' corporate reports. Regression analysis is used to examine if there is an influence of SC toward RDQ, both considered as a single information package and with specific reference to environmental disclosure. Results reveal that a positive association exists between RDQ and SC. Moreover, it is providing some support for the positive correlation between SC and the firm's size. In this sense, the paper contributes to existing risk reporting literature as a pioneering study identifying an IC driver to determine the quality of risk and risk management information. For regulators, this study highlights how, in a context of mandatory disclosure, the quality of information could also depend on firm characteristics (SC). For practitioners, the paper helps in understanding the role of IC in order to increase the quality of the corporate risk reporting.

Sustainable Development Goals and healthy foods: perspective from the food system

“…Nevertheless, previous literature has focused on specific SDG disclosures, such as the case of Goal 12, “responsible consumption and production”, and Goal 1, “no poverty” (Beacom et al , 2020; Sala and Castellani, 2019). Also, as suggested by De Luca et al (2020), research on SDG disclosure is still a novel field, which requires longitudinal analysis by including multiple territorial contexts. In this sense, to enrich the comprehension of the pervasion of SDGs among the food and beverage companies, a more holistic research approach is required.…”

The multi-faceted dimensions for the disclosure quality of non-financial information in revising directive 2014/95/EU

“…Completeness is also linked to the different stakeholder expectations that change over time (Mio et al , 2020) with pressures for a more reliable, trustworthy, and objective disclosure for investors' decisions. In this way, De Luca et al (2020) discussed the evolution from voluntary to mandatory disclosure, highlighting that NFI has increased pressure on organizations to set up risk management tools that assess sustainability risks. De Luca et al (2020) found that investors and stakeholders pay a great deal of attention to the information that demonstrates how management addresses decisions based on risky scenarios.…”

“…Empirical evidence shows that the company sector influences the level of its social, environmental, and sustainability disclosure (Raucci and Tarquinio, 2020) Other research identifies specific circumstances under which the comparability must be considered. For instance, De Luca et al (2020) suggest ways to increase the quality of risk-related disclosure with risk assessment procedures and processes, internal structures, as well as the organizational philosophy and techniques.…”

Intellectual Capital and Innovation Performance: Systematic Literature Review

“…In this regard, the current study assumed that substantial investment in structural capital is anticipated to improve the performance of financial organizations. Previous studies indicated that an organization having weak procedures and systems for tracking its actions often fails to achieve competence regarding performance (De Luca et al 2020). Conversely, an organization with a strong structural capital is expected to possess an encouraging work culture for employees that helps them to learn innovative knowledge with refined and improved performances (Asiaei et al 2020).…”