Integrated reporting and changes in management control systems in large Japanese companies

Hosoda, Masahiro

doi:10.1108/cg-06-2020-0238

Cited by 9 publications

(8 citation statements)

References 29 publications

(83 reference statements)

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“…In recent years, a new reporting concept has gained prominence: integrated reporting (IR), which combines, in a holistic manner, financial and non-financial information (Maroun, 2017; Kilic and Kuzey, 2018; Salvi et al , 2020; García-Sánchez et al , 2021a; Raimo, 2021; Zaro et al , 2022). IR provides users with information on the organisation’s ability to create value in the short-, medium- and long-term and on the potential internal and external factors that are likely to affect such ability (Maroun, 2017; Kilic and Kuzey, 2018; Raimo et al , 2019; Vitolla et al , 2020a; Hosoda, 2021). IR has the potential to overcome the drawbacks of traditional financial reports by adopting a strategic focus and forward-looking orientation in the disclosure of information (Dumay and Dai, 2017; Maroun, 2018; Vitolla and Raimo, 2018).…”

Section: Introductionmentioning

confidence: 99%

Corporate governance and risk disclosure: evidence from integrated reporting adopters

Nicolò

Polcini

Vitolla

2022

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Purpose This study aims to examine the impact of corporate governance attributes, in the form of board characteristics, on risk disclosures provided through integrated reporting (IR). Design/methodology/approach Drawing upon an agency theory perspective, this study examines the effect of the main corporate governance board characteristics (size, gender diversity, independence and meeting frequency) on the level of risk disclosure provided by a sample of 95 IR adopters from 24 countries for 2018. Findings The results suggest that firms are slow to realise IR’s potential to produce innovations in risk disclosure mechanisms. In addition, certain board characteristics, such as gender diversity, independence of directors and meeting frequency, are positive drivers of the risk disclosure provided via IR. Originality/value To the best of the authors’ knowledge, this is the first study that investigates the impact of corporate governance mechanisms on risk disclosure provided via IR. Connecting corporate governance mechanisms to IR risk disclosure practices can contribute to enhancing the practical and theoretical understanding of the role that the board of directors may play in stimulating transparency and accountability about risks via an alternative communication tool, IR, to the benefit of both investors and other stakeholders.

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Section: Introductionmentioning

confidence: 99%

Corporate governance and risk disclosure: evidence from integrated reporting adopters

Nicolò

Polcini

Vitolla

2022

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“…Improvements to both company-level management and disclosure can potentially reduce the perception of investment risk (Hosoda, 2021; Teti et al , 2016; Reverte, 2009). Thus, in line with voluntary disclosure theory, IR adoption can bestow upon a company-specific economic benefit, including increases in stock liquidity and firm value (Barth et al , 2017; Plumlee et al , 2015), enhanced value-relevance of disclosure (Baboukardos and Rimmel, 2016) and increased analyst accuracy (Bernardi and Stark, 2018).…”

Section: Introductionmentioning

confidence: 99%

Voluntary adoption of integrated reporting, effective legal system and the cost of equity

Zaro

Flores

Fasan

et al. 2022

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Purpose Integrated reporting (IR) provides integrated financial and nonfinancial information about companies based on the integrated thinking principle. This study aims to investigate how the cost of equity relates to IR disclosure and the impact of an effective legal system on this relationship. Effective legal system (“enforcement”) represents the strength of the legal system of a country. Although voluntary initiatives are essentially not based on regulations, the authors expect that the effective legal system will influence the implementation of such. Design/methodology/approach To test the study’s hypotheses, linear regressions were applied using the Thomson Reuters database to analyze 20,463 firm-year observations between 2010 and 2017. The treatment group comprised companies that adopted IR; using propensity score matching, the authors defined the control group. The authors adopted a research design based on difference-in-differences to compare the cost of the capital of treatment with the control group for the periods before and after the IR adoption. Findings The results indicate that IR disclosure is negatively related to the cost of equity, and this negative effect is more prevalent for companies operating in high-enforcement environments. Research limitations/implications Cost of equity is not a directly observable variable, implying that the results are sensitive to changes in the parameters that are used to compute this term. The results can help companies looking for evidence of potential effective gains of adopting IR. They also help understand that discussions related to environment, social, and governance information are somehow incorporated by analysts and investors, and reflected in the cost of raising funds. Originality/value This study demonstrates how IR relates to the cost of equity considering a global sample of voluntary adopters. It also analyzes the impact of institutional factors on this relationship by using a robust method of analysis. The results support the argument that companies in a strong legal system are more likely to behave sustainably and to disclose this attitude. Additionally, they are pressured to implement proposals rather than just adopting an initiative as a label.

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“…Integrated reporting (IR) has been presented as one of the main strategic management and accounting innovations in the past decade (De Villiers et al, 2014;Dumay et al, 2017;Vitolla et al, 2019;Hosoda, 2021) as a transitional reporting tool to make a leap from a promising concept to a powerful practise (Busco et al, 2013), and as the rational choice to face the reporting challenges (Adams, 2015;Serafeim, 2015). However, there is a group of studies that highlights the challenges and barriers in adopting IR and operationalizing the IR framework elements, principles and objectives (Dumay et al, 2017).…”

Section: Introduction and Research Backgroundmentioning

confidence: 99%

Integrated reporting, textual risk disclosure and market value

Elshandidy

Elmassri

Elsayed

2021

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Purpose Exploiting the mandatory provision of integrated reporting in South Africa, this paper aims to investigate whether this regulatory switch from the conventional annual report is associated with differences in the level of textual risk disclosure (TRD). This paper also examines the economic usefulness of this regulatory change by observing the impact of TRD on the complying firms’ market values. Design/methodology/approach Archival data are collected and examined using time-series difference design and difference-in-differences design. Findings The authors find that the level of TRD within the mandatory integrated reporting is significantly lower than that of annual reports. The authors find that the impact of TRD in integrated reporting on market value compared to that of annual reports is statistically not different from zero. The authors’ further analyses suggest that corporate governance effectiveness is not a moderating factor to the study results. The results are robust to comparisons with the voluntary adoption of integrated reporting in the UK. Originality/value Collectively, the study results suggest that managers’ adherence to the mandatory provision of integrated reporting has significantly decreased the level of (voluntary) TRD they tended to convey within the conventional annual reports, resulting in a trivial impact on market value. These unintended consequences should be of interest to the International Integrated Reporting Council and other bodies interested in integrated reporting.

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Integrated reporting and changes in management control systems in large Japanese companies

Cited by 9 publications

References 29 publications

Corporate governance and risk disclosure: evidence from integrated reporting adopters

Corporate governance and risk disclosure: evidence from integrated reporting adopters

Voluntary adoption of integrated reporting, effective legal system and the cost of equity

Integrated reporting, textual risk disclosure and market value

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