Essays on Integrated Reporting

The formation of the International Integrated Reporting Council (IIRC) in 2011 and the publication of the integrated reporting framework in 2013 welcomed a new era in corporate reporting. Underlined by integrated thinking, integrated reporting involves the presentation of firms’ financial and non-financial information in a single report in a cohesive manner providing a holistic view of the firms’ value creation process. Integrated thinking meanwhile refers to the integration of both financial and non-financial factors that are key to the firms’ value creation into the day-to-day operations of the firm. IIRC suggests that integrated reporting and integrated thinking bears consequences for the adopting firms including primarily improving the quality of information available to both the internal and external users of the firms’ disclosures. This thesis therefore investigates the consequences of integrated reporting and integrated thinking. The thesis presents three papers examining the effects of integrated reporting and integrated thinking. The first paper explores the effect of integrated thinking on firms’ financial performance. Arguing based on the resource-based view of the firm that integrated thinking is a firm capability and using a large international sample spanning 16 years from 2002 to 2017, the study finds that integrated thinking is positively related to firms’ financial performance and the relationship is moderated by firms’ operating environment. The second paper investigates the role of integrated reporting in transforming firms carbon performance. Based on organizational learning theory, the paper argues that integrated reporting provides useful information from which firms learn and transform their actions. Based on a sample of South African firms where integrated reporting is mandatorily adopted between 2011 and 2018, findings show that firms with better integrated reporting quality have better carbon performance. The third paper observes the effect of integrated reporting on firm risk also on a South African sample over the period 2011 to 2019 and finds that integrated reporting quality is associated with decrease in both systematic and total risk. The thesis supports the claims of IIRC that integrated reporting and thinking bears key benefits for firms.