Disclosure quality under Integrated Reporting: A value relevance approach

Alessandro Cortesi,Luigi Vena

Published 2019 in Journal of Cleaner Production

ABSTRACT

Abstract In response to the growing information needs of stakeholders, the Integrated Report (IR) has been proposed to enhance overall transparency by merging traditional reporting and corporate social responsibility. Despite the wide debate on IR, the evidence of its effects remains mainly confined to a mandatory adoption context. We thus resort to a panel specification of the value relevance framework to analyse the effects of IR voluntary adoption on a sample that spans 15 years, from 2003 to 2017, covering 636 companies from 57 countries. The results support the view that the IR (i) enhances corporate disclosure and reduces information asymmetries; (ii) increases the quality of reported earnings per share; (iii) does not positively influence the value relevance of book value; and it (iv) has marginally decreasing benefits. Lastly, our results (v) do not seem to be affected by the geographical provenance and countries’ economic structures and (vi) do not reveal clear-cut evidence on the relationship between the factors influencing adoption and greater benefits for companies mostly exposed to them.

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