Integrated Reporting Practices in Europe and Value Relevance of Accounting Information under the Framework of IIRC

Loprevite, Salvatore; Rupo, Daniela; Ricca, Bruno

doi:10.5539/ijbm.v13n5p1

Cited by 10 publications

(5 citation statements)

References 36 publications

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“…Moreover, in a highly risky and uncertain market, investors are driven to have the tools to control the cost of equity to invest it in a favourable and certain climate. Our result is, therefore, consistent with those of Salvatore et al (2018) and Wahl et al (2020).…”

Section: Regression Analysissupporting

confidence: 93%

Audit quality, value relevance, integrated reporting and the moderating role of business ethics: evidence from European ESG firms

Hichri

2023

RAF

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Purpose This study aims to investigate the relationship between audit quality and value relevance and subsequently ascertain the moderating effect of business ethics on integrated reporting (IR)–value relevance. Design/methodology/approach This study applied linear regressions with panel data using the Thomson Reuters ASSET4 database from European countries to analyse data of 510 companies belonging to the environmental, social and governance (ESG) index between 2010 and 2022. Findings A significant positive relationship was found between audit quality and value relevance. The results also suggest that IR has significant explanatory power on value relevance, and that business ethics moderate the relationship between IR and value relevance in European ESG firms. Practical implications Managers will see IR, business ethics and audit as a business strategy with incremental market value. In this regard, this study tried to provide insights and managerial solutions for managers of international companies to improve their strategy by drawing on the social, moral and business ethics approach. This finding will improve the informational relevance for investment opportunities, thus resulting in improved business performance. Originality/value To the best of the author’s knowledge, this is the first study to investigate the moderating role of business ethics in the relationship between IR and value relevance. This paper fulfils a recognised need to study the influence of audit quality on investor decisions. Furthermore, the contribution of this study could be observed in the fact that the market value analysis differs between the contractual and the business ethics approaches. Also, including a moderating variable in the explanation and determination of value relevance remains somewhat underexplored.

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Section: Regression Analysissupporting

confidence: 93%

Audit quality, value relevance, integrated reporting and the moderating role of business ethics: evidence from European ESG firms

Hichri

2023

RAF

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“…Also, studies such as Loprevite et al (2018) confirm the IIRC's assessment that the integrated report is expected to improve the quality of traditional accounting information for financial capital providers. Therefore, when analyzing the value relevance of the integrated reports of companies in Europe, they found that the degree of relevance of the profit value is significantly different for companies that publish IR compared to companies that adopt only the traditional financial report.…”

Section: Literature Review 21 Integrated Reporting In Brazilmentioning

confidence: 80%

Factors associated with the voluntary disclosure of the integrated report in Brazil

Fernandes¹,

Barbosa²

2021

JFRA

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Purpose This paper aims to investigate the factors associated with the voluntary disclosure of integrated reporting (IR) in Brazil of the companies listed on the stock exchange – Brasil, Bolsa, Balcão. The cultural dimensions of a nation reflect different priorities in accounting practices. The Brazilian case, therefore, becomes significant, as Brazil is increasingly important in world markets. Design/methodology/approach As an explanatory econometric model, multinomial logistic regression was used (Y = 2 to describe the probability of the IR disclosure; Y = 1 to describe the occurrence of reports with practices similar to the IR and Y = 0 to describe the occurrence of non-disclosure of non-financial reports). Applied to panel data with random effects (chosen for best performance) in the period from 2016 to 2019. Findings Reveals the positive association of the company’s profitability and market-to-book with the probability of the IR disclosure. Regarding the board composition, it is suggested that size does not make a difference, with the greater participation of women and independence of directors associated with better probabilities of adopting the IR in Brazil. Originality/value This work is the first to characterize the Brazilian reality of voluntary disclosure, specifying the implementation of IR, compared to publishing reports similar to the IR and not reporting structured non-financial statements. It can also be considered the first study on the relevance of the board structure in the disclosure of IR by Brazilian companies. Finally, it contributes to the literature on IR adoption, bringing practical results in understanding the most favorable conditions in which the IR framework will be fully implemented.

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“…They found that studies made in a predominantly North American context or a European context similar to the North American (such as the United Kingdom) demonstrate the value relevance of voluntary non-financial disclosure (Berthelot et al, 2012;Chapple et al, 2013;Hussainey & Salama, 2010;Johnston et al, 2008;Lourenço, Branco, Curto, & Eugenio, 2012;Sinkin et al, 2008). On the contrary, studies conducted in the Continental European context show mixed results, with only a few studies finding that non-financial information is value relevant (Reverte, 2016;Schadewitz & Niskala, 2010), whereas other studies do not corroborate such findings (Carnevale et al, 2012;Cormier & Magnan, 2007;Moneva & Cuellar, 2009 (Cortesi & Vena, 2019) and an increase in the value relevance of earnings (Baboukardos & Rimmel, 2016;Loprevite, Rupo, & Ricca, 2018).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 96%

“…To our knowledge, the effects of such adoption on the value relevance of non‐financial disclosure have not been investigated yet, with the exception of Veltri, De Luca and Phan (2020) that focuses on the value relevance of risk disclosure in the post‐adoption period. Many recent studies have investigated the value relevance of the mandatory adoption of the Integrated Reporting (IR) framework (IIRC, 2013) in South Africa, showing that the adoption of IR is associated with a reduction of information asymmetries (Cortesi & Vena, 2019) and an increase in the value relevance of earnings (Baboukardos & Rimmel, 2016; Loprevite, Rupo, & Ricca, 2018).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Does the EU Directive on non‐financial information influence the value relevance of ESG disclosure? Italian evidence

2020

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The implementation of the EU Directive on non-financial information determines the transition from a voluntary to a mandatory disclosure setting. This paper is a first attempt to investigate if this transition influences the value relevance of non-financial information, which relates to the environmental, social and governance disclosure (ESG) requirements of the Directive. Italy provides an interesting setting as non-financial information was generally voluntary before the Directive, which was implemented with the Italian Legislative Decree 254/2016. To this extent, we examine the non-financial, environmental and social disclosure practices of 231 Italian listed firms in the pre-(2016) and post-(2017) Legislative Decree application. Our results do not show any relevant increase of such disclosures after the Legislative Decree application, as Italian listed firms limit such disclosure to a minimum requirement. Further, this finding is confirmed also for those firms voluntarily providing a non-financial report (sustainability or integrated report) before the Legislative Decree application. Our regression analysis shows that accounting numbers are associated with share prices, while non-financial, environmental and social information are not value-relevant with reference to the pre-and post-Legislative Decree application. This means that the non-financial, environmental and social information beyond the financial accounting information do not explain any incremental value-relevant information to investors in the non-financial mandatory disclosure setting required by the new regulation. Our results enrich previous evidence concerning the value relevance of non-financial and ESG disclosure mainly focused on Anglo-Saxon contexts.

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Integrated Reporting Practices in Europe and Value Relevance of Accounting Information under the Framework of IIRC

Cited by 10 publications

References 36 publications

Audit quality, value relevance, integrated reporting and the moderating role of business ethics: evidence from European ESG firms

Audit quality, value relevance, integrated reporting and the moderating role of business ethics: evidence from European ESG firms

Factors associated with the voluntary disclosure of the integrated report in Brazil

Does the EU Directive on non‐financial information influence the value relevance of ESG disclosure? Italian evidence

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