The determinants of integrated reporting quality in financial institutions

Abstract

Purpose This study aims to investigate the financial and country-level determinants of integrated reporting quality in the financial industry. Specifically, this study analyses the impact of profitability, size, leverage and civil law system on the integrated reporting quality. Design/methodology/approach Hypotheses were tested using a regression model on a sample of 87 financial institutions. An integrated reporting (IR)-quality scoreboard was used to measure report quality. Findings The results show that IR quality is significantly and positively influenced by profitability, size, financial leverage and the civil law system. Practical implications The results have particularly important implications for large, profitable financial institutions that make greater use of financial leverage and that are localized in non-civil law countries. Managers should increase transparency by expanding the content and quality of the information contained in the integrated reports. Originality/value This study contributes to the literature by revealing several financial factors that influence IR quality. To the best of the authors’ knowledge, this is the first study to investigate IR quality in the context of the financial industry.

The role of board of directors in intellectual capital disclosure after the advent of integrated reporting

“…In fact, depending on their profitability, companies may decide to allocate more or less resources to the collection and dissemination of information relating to intellectual capital. SIZE, calculated as the natural logarithm of total assets, has been included as a control variable since, as shown by previous studies, the size of companies can affect disclosure policies (Frias‐Aceituno, Rodríguez‐Ariza, & García‐Sánchez, 2014; Vitolla, Raimo, Rubino, & Garzoni, 2020). AGE, calculated as the number of years since the founding of the firm, is a proxy for firm stability.…”

The role of ownership structure in integrated reporting policies

“…In fact, a quality disclosure in addition to the content must necessarily consider other aspects such as the form, themes, range of issues and style (Hackston & Milne, 1996; Hammond & Miles, 2004). For this reason, in order to obtain a quality score for the integrated reports, this study used the scoreboard created by Pistoni et al (2018), which measures quality by focusing on four different aspects: content, assurance and reliability, background and form (Vitolla, Raimo, Rubino, & Garzoni, 2020; Vitolla, Salvi, Raimo, Petruzzella, & Rubino, 2020).…”

Do audit committee attributes influence integrated reporting quality? An agency theory viewpoint

“…The ability of independent members to perform supervisory and monitoring functions more effectively derives from the absence of relations with inside management (Carcello & Neal, 2003; Mangena & Pike, 2005). As previously mentioned, the complexity of the IR, which involves the collection of financial and non‐financial information and the representation of the interconnections existing between the different aspects of business management (Vitolla, Raimo, & Rubino, 2020b; Vitolla, Raimo, Rubino, & Garzoni, 2020), requires important supervision and monitoring activities. In this regard, a greater level of independence of the audit committee, by improving the supervisory and monitoring functions of this body, could favour the goodness of the process of collecting and representing information in an integrated and quality way.…”