Informing or obfuscating stakeholders: Integrated reporting and the information environment
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Yao, Troy
Zaman, Mahbub
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Abstract
The global development of integrated reporting (IR) is underpinned by the recognition of increased complexity of businesses and stakeholder demands for information relating to financial performance, management, corporate governance, and sustainability being provided in a single, coherent document which facilitates stakeholder decision making. This paper examines the lexical properties of IR following the introduction of the International Integrated Reporting Council (IIRC) Framework. Using an international sample, we find that when adopted voluntarily, IR are lengthier, use more complex language, and contain more boilerplate statements. Our findings suggest that without regulation, firms may continue to produce long and difficult to understand reports in fear of being perceived as omitting “bad news.” This fear might be justified as we find loss of analyst following and greater analyst uncertainty when voluntarily adopted IR is concise. In the regulated setting of South Africa, however, we find IR has become more concise, and firms that produce longer and more complex documents suffer from a deterioration of their information environment. Our findings suggest that regulators and practitioners need to be cognizant of the potential for an increased volume in reporting to obfuscate the message rather than inform stakeholders.
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Business Strategy and the Environment
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30
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8
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© 2021 ERP Environment and John Wiley & Sons Ltd. This is the peer reviewed version of the following article: Sinnewe, E; Yao, T; Zaman, M, Informing or obfuscating stakeholders: Integrated reporting and the information environment, Business Strategy and the Environment, 2021, 30 (8), pp. 3893-3906, which has been published in final form at https://doi.org/10.1002/bse.2847. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
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Accounting, auditing and accountability
Banking, finance and investment
Strategy, management and organisational behaviour
Social Sciences
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Life Sciences & Biomedicine
Business
Environmental Studies
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Sinnewe, E; Yao, T; Zaman, M, Informing or obfuscating stakeholders: Integrated reporting and the information environment, Business Strategy and the Environment, 2021, 30 (8), pp. 3893-3906