Readability of integrated reports: an exploratory global study

Abstract

Purpose A goal of integrated reporting (IR) under the International Integrated Reporting Council (IIRC)’s leadership is to provide clearly written, comprehensible and accessible information. In light of this objective, the purpose of this paper is to explore the readability and accessibility of integrated reports, an issue magnified by the IIRC’s continual commitment to clear and readable report language, and its intention for IR to become the corporate reporting norm. Design/methodology/approach In a whole text software facilitated analysis, the study utilises readability measures and supplementary measures of reader accessibility in a multi-year analysis of a large sample of global integrated reports sourced from the IIRC examples database. Findings The findings highlight the low readability of analysed integrated reports and indicate that readability is not improving. The supplementary measures suggest sub-optimal use of visual communication forms and overuse of structural presentation techniques which may contribute to reader accessibility of the analysed reports. Research limitations/implications The study extends readability analysis to an emerging corporate reporting phenomenon and its findings contribute to the growing IR literature. The study applies supplementary measures of reader accessibility which advance the methods available to assess the communication efficacy of integrated and other corporate reports. Practical implications The analysis of the readability and accessibility of integrated reports in the study indicates that the IIRC’s goal of clear, comprehensible and accessible reporting is not reflected by reporters’ practices. This has implications for the IIRC, reporting organisations, report readers and regulators. Originality/value The study represents the first large-scale analysis of the readability and accessibility of global integrated reports.

Readability of Accounting Disclosures: A Comprehensive Review and Research Agenda*

“…We consider a study to be descriptive if the goal is to determine the level of readability of disclosures, whereas an impact study examines the impact or influence of readability on another factor, such as performance. Descriptive studies include purposes such as, but not limited to, determining the readability of disclosures (Courtis 1998;Linsley and Lawrence 2007;Loughran and McDonald 2014a;Pashalian and Crissy 1952), evaluating its readability (Marsh et al 2004;Soper and Dolphin 1964), and comparing the readability of two disclosures (Cheung and Hu 2017;Jones 1988;Lahtinen and Shipe 2017;Moreno and Casasola 2016;Richards and van Staden 2015;Stone and Lodhia 2019). Most of these studies conclude that the readability of all reports is difficult.…”

“…,Stone (2011),Stone and Lodhia (2019),Stone and Parker (2016),Sydserff and Weetman (1999),Wang et al. (2018) Flesch-Kincaid Grade Level Chen and Tseng (2020), De Franco et al (2015), Dempsey et al (2012), du Toit (2017), Fisher et al (2019), Guay et al (2016), Hwang and Kim (2017), Lahtinen and Shipe (2017), Laksmana et al (2012), Law and Mills (2015), Marsh et al (2004), Nazari et al (2017), Richards and van Staden (2015), Stone and Lodhia (2019), Wang et al (2018) Gunning Fog Ajina et al (2016), Bai et al (2019), Bushee et al (2018), Chakrabarty et al (2018), Chen and Tseng (2020), Cheung and Hu (2017), Cho et al (2019), Courtis (1995), De Franco et al (2015), du Toit (2017), Fisher et al (2019), Guay et al (2016), Harjoto et al (2020), Hoitash and Hoitash (2018), Hooghiemstra et al (2017), Hsieh et al (2016), Hu et al (2018), Hwang and Kim (2017), Kim et al (2019), Lahtinen and Shipe (2017), Laksmana et al (2012), Lang and Stice-Lawrence (2015), Law and Mills (2015), Lee (2012), Lehavy et al (2011), Li (2008), Lim et al (2018), Lo et al (2017), Loughran and McDonald (2014b), Marsh et al (2004), Melloni et al (2017), Miller (2010), Nazari et al (2017), Richards and van Staden (2015), Stone and Lodhia (2019), Wang et al (2018), Xu et al (2020) SMOG Chen and Tseng (2020), Courtis (1987), Fisher et al (2019), Guay et al (2016), Harjoto et al (2020), Laksmana et al (2012), Marsh et al (2004), Muslu et al (2019), Nazari et al (2017), Richards and van Staden (2015) Lix Courtis (1987, 1995), Guay et al (2016), Smith and Taffler (1992) Cloze Adelberg (1979), Jones and Smith (2014), Stevens et al (1992) Bog Blanco et al (2020), Bonsall et al (2017),,Hasan (2020),Kuang et al (2020) addition, we analyze the motivations examined by existing studies by categorizing them.…”

A multi-theoretical approach on drivers of integrated reporting – uniting firm-level and country-level associations

“…Furthermore, the disclosure of single documents increases the risk of information overload (de Villiers et al , 2014). To mitigate these concerns and to support the reduction of information asymmetry, the idea of an integrated report has gained importance (Stone and Lodhia, 2019). An integrated report describes the interrelations between financial and non-financial value creation aspects (Atkins et al , 2015; Stent and Dowler, 2015; McNally et al , 2017).…”

Integrated Reporting’s Impact on Corporate Governance: Study in Asean Capital Market

“…As voluntary disclosure, some research supports (optimistic) that companies should implement IR as their annual reporting (Knauer and Serafeim, 2014;Serafeim, 2015;Baboukardos and Rimmel, 2016;Burke and Clark, 2016;Colvert, 2016;Mio et al, 2016;Vaz et al, 2016;Hoque, 2017;Pavlopoulos et al, 2017;Zhou et al, 2017;Vesty et al, 2018;Esch et al, 2019;Pavlopoulos et al, 2019). Some other studies still feel doubtful (pessimistic) about the benefit or positive impact of IR on companies (Chaidali and Jones, 2017;Dumay et al, 2017;Bananuka et al, 2019;Stone and Lodhia, 2019). Moreover related to the fact that the most corporates around the world, especially in Asia are family businesses (Balasan, 2014;Soler et al, 2017), where the ownership of the majority of families might increase the reluctance of family businesses to disclose IR to their stakeholders.…”