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J Manag Control (2017) 28:275–320
DOI 10.1007/s00187-016-0235-4

ORIGINAL PAPER

Integrated reporting: The current state of empirical
research, limitations and future research implications

Patrick Velte1 · Martin Stawinoga2

Published online: 13 May 2016
© Springer-Verlag Berlin Heidelberg 2016

Abstract In view of the increased demand for non-financial reporting after the finan-
cial crisis of 2008/2009, integrated reporting (IR) plays a key role in management
control and stakeholder relations management. As a consequence of “integrated think-
ing” IR combines traditional financial accounting with sustainability and corporate
governance related issues to enhance the decision usefulness of modern business
reporting. Although there has been steady growth in the awareness of IR research
(Eccles et al. J Appl Corp Finance 27:8–17, 2015), the current state of empirical IR
research activities is not well described so far. This literature review evaluates 44
empirical studies on IR which were published especially after the adoption of the
IR framework by the International Integrated Reporting Council (IIRC) in Decem-
ber 2013. We will briefly introduce the IR research agenda, which provides a clear
structure for the analysis of current empirical research activities in this field. For the
market, organization and individual/group decision level, we show which factors con-
tribute to IR implementation and IR quality. Furthermore, empirical research focuses
on market reactions to IR. We also stress the limitations of the studies and provide
useful recommendation for future IR research activities for each level of analysis.

The authors thank the anonymous reviewers and the managing editor for their helpful comments.

B Patrick Velte
[email protected]

1 Chair of Accounting & Auditing, Leuphana University of Lueneburg, Scharnhorststr. 1,
21335 Lueneburg, Germany

2 Chair for Business Administration, especially Accounting & Auditing,
Helmut-Schmidt-University/University of the Federal Armed Forces Hamburg,
Holstenhofweg 85, 22043 Hamburg, Germany

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276 P. Velte and M. Stawinoga

Keywords Integrated reporting · Legitimization theory · Institutional theory ·
Behavioural decision theory · Resource dependency theory · Empirical research

JEL Classification M410 · M420

1 Introduction

Organizations have come under pressure to adapt their business practices to consider
the increasing public awareness of environmental, social and governance (ESG) issues
(Kolk and van Tulder 2010; Seuring and Mueller 2008). Stakeholders demand that an
organization’s ESG performance be transparent, and corporate social responsibility
(CSR) reports have proved vital in meeting those demands. The number of organi-
zations worldwide utilizing voluntary CSR reports has substantially increased since
the financial crisis in 2008/2009 (KPMG 2015), and CSR reporting has been subject
to increasing standardization (e.g. Global Reporting Initiative), regulation (e.g. EU
directive 2014/95) and research activity (see Huang and Watson 2015). Nevertheless,
it is often difficult to integrate CSR content with traditional financial reporting within
a single integrated report.

In light of these circumstances, the International Integrated Reporting Council
(IIRC) has adopted a principle-based framework concept for integrated reporting (IR)
(IIRC 2013), which requires an integrated presentation of financial and non-financial
information (Oliver et al. 2016). CSR reporting and IR differ both in their reporting
structure and their target group. CSR reporting qualifying as a classical stakeholder
tool in both business practice and research is beyond dispute. Meanwhile, the IIRC
explicitly states in the IR framework (concerning the initial phase of IIRC’s standard
setting-process: Reuter and Messner 2015) that IR should primarily address investors,
as this can help management avoid a conflict of objectives arising from the consider-
ation of heterogeneous target groups. Nevertheless, IR should be a key information
instrument for all stakeholders, not only for shareholders (Eccles and Krzus 2015). If
IR is classified as a useful new development in business reporting, it might replace
CSR reporting in the long run.

IR is ideally based upon an interconnected internal regulation of the owner and
socially related value creation process of a company (Haller and Staden 2014; Kaya
et al. 2016). This new type of reporting framework, based on an internal management
and control concept (also known as integrated thinking: Plessis and Rühmkorf 2015;
Oliver et al. 2016), proceeds on the assumption that IR represents an external com-
munication medium regarding the ESG activities of a company within the reporting
period and the respective interdependencies, on the one hand, and the company’s ori-
entation towards long-term financial and non-financial objectives, on the other hand
(Eccles and Spiesshofer 2015; Flower 2015). A sustainable implementation of this
framework requires a company-wide interlocking of the individual corporate areas
which often operate in isolation (Soh et al. 2015). This is especially relevant to the
design and function of external and internal reporting systems. The implementation of
this framework results in the holistic management of a company (Morros 2016). Fur-
thermore, this can provide addressees with a holistic picture of the owner and socially

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Integrated reporting: The current state of empirical… 277

related value creation process of a company within a centralized single reporting tool,
as opposed to financial and sustainability reporting.

IR has gained popularity in business practice (KPMG 2015) and has recently gained
great importance in empirical research. Therefore, the objective of our paper is to
evaluate 44 empirical studies (archival, experimental, surveys, case studies and inter-
views) on IR. We create an IR research agenda based on three different levels of
analysis (market, organizational and individual/group decision-making levels) con-
sidering basic theories and research content. Although some studies concentrate on
the influencing factors of IR implementation and IR quality (e.g. firm characteristics,
corporate governance and firm processes), market reactions (e.g. influence on firm val-
uation) are also analysed. By summarizing the currently examined cause-and-effect
coherencies in the context of empirical IR research, this paper offers the first system-
atic literature review on IR, discusses its limitations and reveals the possible directions
for further research endeavours. Although the exploration of the motives for the ini-
tial preparation of IR dominate the present scientific discussion, an analysis of the
long-term incentive effects induced by IR and the subsequent regulatory implications
for standard setters, reporting entities, auditors and addressees should be highlighted.
The increasing deployment of qualitative empirical research designs in CSR research
(e.g. experiments and interviews) is of special interest in the exploration of current
developments within IR.

By providing starting points for future empirical IR research activities, this litera-
ture review is primarily aimed at researchers. Empirical IR research has grown rapidly
since 2015, so it is necessary to highlight the current tendencies and identify any
important research gaps from an international view. Additionally, the consolidated
current research results illustrating the main effects of IR are also beneficial for prac-
titioners raising their awareness of the reactions to the publication of an integrated
report. The results of this literature review might also be interesting for regulators and
the IIRC regarding the possible implementation of mandatory IR or the establishment
of a modified version of the IR framework.

Our analysis is structured as follows. First, the IR research agenda with the differ-
ent levels of analysis (market, organizational and individual level), the corresponding
main theories and the central research topics are described (Chapter 2). In this context,
we modify the approach by Cohen and Simnett (2015), which is based on CSR and
CSR assurance. This is followed by an appraisal of the empirical findings (Chapter
3), in which an introductory presentation of the methodology (Chapter 3.1) precedes
a discussion of the underlying factors and the consequences of IR regarding the three
mentioned levels (Chapters 3.2–3.4). Archival studies have shown that the market is
affected by company specific factors as well as corporate governance issues, con-
firming that IR leads to positive market reactions (e.g. firm valuation). Studies on the
organizational level, consisting mainly of interviews, case studies and surveys, are
designed to determine management motivation and perceptions for the introduction
of IR and IR quality. The focus of experiments and interviews at the individual or
group decision levels is similar to that in market level studies, examining stakeholder
reactions to IR, mainly with a focus on investors. Finally, the review considers the lim-
itations of the existing empirical research and makes a useful contribution for future
research activities in this field (Chapter 4).

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278 P. Velte and M. Stawinoga

2 IR research framework

While companies’ disclosures are expected to support decision making, reporting
approaches are increasingly diverse, and financial and non-financial reporting formats
are often insufficiently integrated. Consequently, the demands for IR of key value
drivers have recently been voiced. Such IR aims to combine key financial as well
as non-financial aspects in “one report”, and based upon six capitals, it shows the
reciprocal effects between different performance indicators. In practice, senior man-
agement therefore needs to handle and consider ESG capital, their interrelatedness
and dependencies according to the entity’s long-term strategy, value creation, perfor-
mance management and management decision and control, which should be based on
integrated thinking (Oliver et al. 2016). Although the operationalization of integrated
thinking in organizations has seemed to be a difficult issue so far, Oliver et al. (2016)
have recently presented a framework for this approach, providing evidence of hard
and soft integrated thinking and linking of integrated thinking to sustainability.

The IIRC has been instrumental in the development of the reporting concept on
an international level. The adoption of its first official framework in December 2013
was a key milestone for the preparation and disclosure of integrated reports (IIRC
2013). An integrated report prepared in line with the IIRC framework primarily aims
to explain an organization’s value creation relevant to the owner and to society. The
utilization and modification of a total of six types of capital is discussed (Rambaud
and Richard 2015), providing a basis for a differentiated presentation of the business
activities over time in a manner useful to stakeholders. The principle-based approach
of the IIRC framework provides management with sufficient freedom for the cus-
tomized arrangement of an organization’s integrated report. It also increases the risk
of facilitating greater heterogeneity and limited comparability of different integrated
reports. It is vital that reporting entities see IR as a medium for the integrated substan-
tiation of ESG activities. To lower the risk of information overload for stakeholders
and to decrease the value gap between balanced equity and firm value, IR connects
the material information of other reports (e.g. financial reports, corporate governance
reports, CSR reports and compensation reports). Figure 1 summarizes the conception
of IR as stipulated in the IIRC framework (see also Müller and Stawinoga 2015).

The structure of our literature review is based on the research agenda created by
Cohen and Simnett (2015) that was published in the journal Auditing. While the paper
describes the current environment for services for CSR assurance, the implementation
of CSR reports is also mentioned. CSR assurance has gained attention in empirical
CSR research during the last years. As IR assurance is not yet a common research
topic, we focus on the reporting process in our review. Cohen and Simnett (2015)
discuss opportunities for research and highlight areas that are classified as significant
research possibilities and areas of significance that have been under-represented in the
past. The authors outline examples of different theoretical approaches and research
methods that might be used to examine interesting research topics related to CSR.
Cohen and Simnett (2015) made a clear separation into three different levels of analysis
(market level, organization level, individual or group decision-making level).

We have adapted this approach to our examination of IR research. While we also
structure our literature review using the three levels of analysis and the corresponding

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Integrated reporting: The current state of empirical… 279

INTEGRATED
REPORT

Purpose
Description of organizational

value creation over time

Financial reports CSR reports

Corporate governance reports Compensation reports

Addressee
First: Shareholders

Second: Other stakeholders

Content
Quantitative and

qualitative aspects

Standard setting
(IIRC)

Fig. 1 IR and other main (non)financial reporting elements

main theories and methods, we concentrate on IR research. Furthermore, we stress
the impact of main input factors on the market level (firm attributes and corporate
governance), the organizational level (firm processes and management perception) and
individual/group decision making level (firm attributes and stakeholder perception) on
thedecisionofthecompanytoimplementIRandtocontrolIRquality.Asafinaloutput,
we also include the market reactions to IR. The final IR research agenda is shown in
Fig. 2.

3 Review of empirical IR research

3.1 Data collection

Relevant studies for our analysis were identified by a comparison of (inter)national
databases (Web of Science, Google Scholar, SSRN, Ebsco and Science Direct) and
libraries until the end of February 2016, with a targeted search for the following
primary keywords: “integrated reporting”, “integrated reporting assurance”, “Inter-
national Integrated Reporting Council” and “integrated thinking”. Additionally, we
included a search for the following keywords: “corporate social responsibility”, “cor-
porate social responsibility reporting”, “corporate social responsibility disclosure”,
“environmental reporting”, “social accounting”, “social reporting”, “CSR reporting”,
“CSR disclosure”, “CSR assurance”, “sustainability reporting” and “sustainability
assurance”. In parallel, the search was widened by the addition of the broader terms
“corporate governance” and “voluntary reporting”. The research focus was on transna-
tional studies as well as on national studies from South Africa, Australia and the USA.
Other states were also included, e.g. selected European member states (e.g. Denmark
and the Netherlands). Empirical studies with various methods (archival, experiments,
interviews, surveys and cases studies) have been selected. Due to the relatively new

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280 P. Velte and M. Stawinoga

Market reactions

Integrated reporting research agenda

Methods

• Stakeholder agent theory
• Legitimacy theory

• Institutional theory
• Resource dependency theory

• e.g. Behavioural decision
theory

• Archival
• Interview/survey
• Case study

• Experiment
• Interview

Market level Organizational level Individual/group
decision -making level

of

Implementation of IR

• Firm attributes
• Corporate governance

• Firm processes
• Management motivation

• Firm attributes
• Stakeholders perceptions

Increased IR quality

Research
methods

Main
theories

Level of
analysis

Main
input

factors

Output

Fig. 2 IR research agenda

research topic of IR, a temporal limitation was not useful. A total of 83 studies in Eng-
lish have been identified. We also integrate working papers in our analysis because of
the new research topic and the limited amount of empirical research studies available.
Corporate social responsibility reporting is characterized in this context as an evalua-
tion of a stand-alone report covering the ESG issues of an entity [concept of the triple
bottom line: reporting is primarily in line with the guidelines of the Global Report-
ing Initiative (GRI)] as an additional reporting instrument in comparison to classical
financial reporting, and it represents a clear stakeholder tool. IR, however, represents a
different approach aiming to combine financial and CSR reporting with the integrated
thinking approach. In contrast to the casuistic GRI guidelines, the IIRC-framework is
principle based and thus not comparable to a CSR report. After the separation of CSR
studies, we realize a final sample of 44 IR studies. This analysis provides crucial added
value compared to the previous literature reviews and meta-analyses focused on CSR
and CSR reporting (Berthelot et al. 2003; Fifka 2013; Gray et al. 1995; Huang and
Watson 2015; Lee and Hutchison 2005; Malik 2015; Mathews 1997; Roberts 1992;
Simnett 2014). Since CSR reporting and IR represent different concepts, a separate
literature review is justified.

Table 1 provides an overview of the papers per research strand, noting the number of
papers included, the year of publication, the states examined and the sources (working
paper, book chapters and journals) in which the contributions were published. The
studies focus mainly on the market and organizational level covering the study period

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Integrated reporting: The current state of empirical… 281

of 2012–2016. Regarding the states examined, worldwide samples are frequently used
in the market level of analysis. Due to the country’s long history of CSR reporting and
mandatory IR for public interest entities based upon a comply-or-explain mechanism
from the King III Report on Corporate Governance (Lee and Yeo 2015), South African
enterprises are a common subject for empirical IR studies. Journal publications are
heterogeneous regarding discipline and quality. Concerning the publication medium,
IR studies are a common subject for publication in CSR journals (e.g. Business Strategy
and the Environment and Journal of Business Ethics), whereas classical accounting
and finance journals (e.g. Accounting & Business Research and Review of Quantitative
Finance & Accounting) do not yet cover this topic with the same intensity.

Relevant empirical studies are allocated to the respective level in which they were
placed in Table 1. Case studies, surveys and interviews examining organizational level
impacts and archival studies analysing market level effects account for the greatest
proportion of published research. Only a small number of studies evaluated individual
or group decision making through interviews or experiments. At present, only one
empirical study specifically dealt with IR assurance (Dilla et al. 2015). Given that IR
and the principle-based approach are relatively new concepts, these survey findings
were not surprising. Moreover, the IIRC only issues a general recommendation for
independent assurance, but it provides no specific quality or assurance benchmarks.
Consequently, IR assurance is often based on existing CSR assurance standards.

3.2 Market level of analysis

3.2.1 Legitimacy theory

According to legitimacy theory, an organization has an implicit social contract with the
society in which it operates. This social contract (Shocker and Sethi 1973) motivates
an organization to comply with a society’s specific values, norms and boundaries by
implementing adequate structures and processes (Dowling and Pfeffer 1975). Thus,
the going concern and long-term survival of an organization is subject to its ability to
meet society’s expectations through suitable systems. If a legitimacy gap arises or is
detected, an organization will adopt legitimating strategies (Fernando and Lawrence
2014).

However, societal values are dynamic (Deegan 2002), especially with respect to
ESG issues. Therefore, legitimization is a continuous process which is supported by
the voluntary introduction of IR as an effective tool for communicating an organiza-
tion’s legitimization actions. IR therefore enhances an organization’s image as a good
corporate citizen (O’Donovan 1999). Such legitimization strategies improve an orga-
nization’s access to resources, their image and their customer, employee and investor
relationships, which will subsequently enhance their competitive position. If society
suspects a lack of transparency, its legitimacy suffers (Aguilera et al. 2007). The dis-
closure of ESG activities and impacts is vital for an organization, and thus far, the
stand-alone CSR report has dominated such reporting activities. Legitimacy theory
suggests that IR primarily serves to legitimize an organization’s activities (Deegan
2002). While such an assessment is rather predictable under this theory, it fails to

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282 P. Velte and M. Stawinoga

Table 1 Count of cited published papers

Total Market level Organizational level Individual/group-
decision making level

Panel A: By publication year

• 2015: 11 • 2016: 3 • 2015: 3
• 2014: 4 • 2015: 11 • 2014: 2
• 2013: 3 • 2014: 5 • 2012: 1
• 2012: 1

Total: 44 19 19 6

Panel B: By state (some studies include data from more than one country)

• South Africa: 5 • Australia: 4 • Australia: 1
• USA: 1 • Denmark: 2 • South Africa: 2
• Worldwide: 13 • Italy: 1 • USA: 2

• Malawi: 1 • Worldwide: 1
• Netherlands: 1
• New Zealand: 1
• South Africa: 5
• UK: 1
• USA: 1
• Worldwide: 2

Total: 44 19 19 6

Panel C: By sources

• Working paper: 8 • Book chapter: 2 • Working paper: 2
• Journals: • Working paper: 1 • Journals:

â—¦ Business Strategy
and the
Environment: 3

• Journals:
â—¦ Accounting &
Business
Research: 1

â—¦ Journal of
Corporate
Citizenship: 1

â—¦ Corporate Social
Responsibility and
Environmental
Management: 1

â—¦ Accounting,
Auditing &
Accountability
Journal: 3

â—¦ Journal of Legal,
Ethical and
Regulatory Issues: 1

â—¦ International
Business Review: 1 â—¦ Bulletin of

Geography: 1

â—¦ Meditari
Accountability
Research: 1

â—¦ Journal of Applied
Corporate Finance:
2

â—¦ Corporate
Communications: 1

â—¦ Public Relations
Review: 1

â—¦ Journal of
Business Ethics: 1

â—¦ Journal of Business
Ethics: 1

â—¦ Journal of Cleaner
Production: 1

â—¦ Journal of
Economics and
Financial Services: 1

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Integrated reporting: The current state of empirical… 283

Table 1 continued

Total Market level Organizational level Individual/group-
decision making level

â—¦ Journal of
Intellectual Capital: 1

â—¦ Journal of Management
Research: 1

â—¦ Review of
Quantitative Finance
& Accounting: 1

â—¦ Meditari Accountancy
Research: 1

â—¦ Procedia Economics &
Finance: 1

◦ SEA—Practical
Application of Science: 1
â—¦ Social and Environmental
Accountability Journal: 1
â—¦ Southern African
Business Review: 1

â—¦ Sustainability
Accounting, Management
and Public Policy: 2

Total: 44 19 19 6

explain why an organization would make selective IR disclosures or how the specific
disclosures are chosen.

However,anorganization’scorporategovernancestructurehasamajorimpactonIR
perception. Board composition is the major legitimacy aspect of an adequate corporate
governance structure for both the one-tier and the two-tier system. The international
discussionontheimpactofboarddiversity(e.g.gender,ageandinternational)andCSR
compensation on financial and nonfinancial performance has increased over the last
few years and became a viable topic in empirical corporate governance research (see
Dienes and Velte 2016; Müller et al. 2015; Stawinoga and Velte 2015). Stakeholders
expect a clear management description of the assumed impact of corporate governance
issues on long-term performance. Thus, IR with a clear connectivity with corporate
governance and financial reporting can lead to the higher legitimacy of an enterprise
in the view of the stakeholders.

3.2.2 Archival research

Archival studies dominate market level research. These include analyses of enterprise
characteristics and corporate governance variables on the implementation of IR, IR
quality and market reactions. While an organization may obtain benefits of a financial
nature, the introduction of IR communicates an organization’s transparency objec-
tives and integrated thinking to their stakeholders in order to reach legitimacy. The
latter would not be covered by a separate CSR report. According to legitimacy theory,
enterprise-specific and economic factors (e.g. industry, size and performance), exter-
nal corporate governance factors (e.g. civil law country, legal framework and investor
protection requirements) and internal corporate governance factors (e.g. board diver-

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284 P. Velte and M. Stawinoga

sity) all affect an organization’s decision to adopt IR. Once implemented, IR facilitates
favourable market reactions, including reduced equity costs, analyst forecast errors and
dispersions and enhanced performance. While a worldwide sample represents the best
practice of the analysis, some of the studies considered use a geographically limited
sample (e.g. South Africa).

Implementation of IR

In most countries, IR is still voluntary and mainly used by public interest entities
(PIEs). Small and medium sized-entities are often not interested in IR. Therefore,
firm-specific variables (e.g. branch and firm size) could be the main influencing factor
on the decision to implement IR. A study by Frias-Aceituno et al. (2014) indicates
that size and profitability have a positive impact on IR implementation, while the
level of concentration in the business sector has a negative impact. Lai et al. (2014)
find indications for a positive impact of ESG disclosure ratings and the likelihood of
voluntary adoption of IR.

Other market level analyses concentrate on the influence of corporate governance
variables (e.g. board size and board diversity) on IR. According to Frias-Aceituno et al.
(2013b), a larger number of board members and their more substantial experience and
broader diversity of backgrounds increase the likelihood and level of integration of the
various reports prepared by the relevant organization. Frias-Aceituno et al. (2013a)
state that companies located in civil law countries and in countries with high indices
of law and order are more likely to prepare and publish a broad range of integrated
reports and support the decision-making process of their various stakeholders. Finally,
a study by Jensen and Berg (2012) finds that an increase of IR is affected by stronger
investor protection, weaker employment protection laws, stronger market orientation,
dispersed ownership structures, a higher share of private expenditures for tertiary
education, a higher trade union density, a higher level of CSR development, a higher
level of secular-rational values and higher developed countries.

The only empirical study to date analysing the impact of cultural characteristics on
IR (Garcia-Sánchez et al. 2013) states that companies located in countries with a strong
common good orientation (a collectivist and feminist cultural system) are more likely
to introduce IR. Furthermore, companies operating in countries with similar cultural
systems adopt homogenous patterns of behaviour with respect to IR. Culture has a
strong relationship to stakeholders’ perceptions about an adequate communication
process.

IR quality

Following the implementation of IR, fundamental questions are raised about the
impact of firm characteristics on IR quality. In this context, according to Melloni
(2015), optimistic phrasing of the intellectual capital disclosed in IR has a positive
impact on organizational performance, size and intangibles. Churet and Eccles (2014)
observe a positive link between the quality of overall ESG management and IR in
the RobecoSAM database. According to Mio and Fasan (2014), the degree to which
IR disclosures are considered as material differs between industries. Finally, Man-
iora (2015) analyses the impact of the implementation of IR on IR quality and finds
mixed results: while there is a positive link compared with no ESG reporters and ESG

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Integrated reporting: The current state of empirical… 285

reporting in annual reports, the publication of IR is not beneficial for firms with a long
tradition in stand-alone CSR reports.

Market reactions

A growing number of recent archival studies concentrate on the link between IR
implementation, IR quality and market reactions (e.g. stock liquidity, analyst forecast
accuracy and firm valuation). Barth et al. (2015), Bernadi and Stark (2015), Lee and
Yeo (2015) and Martinez (2015) argue that better IR quality leads to positive market
reactions for a South African sample. Although the authors use different measures for
IR quality, beyond the research environment, heterogeneous IR quality measures exist
as well (such as the Ernst and Young excellence in IR awards ranking).

Barth et al. (2015) indicate that IR quality is connected with lower bid-ask-spreads,
higher Tobin’s Q and higher expected cash flows. A significant positive link between
IR quality and Tobin’s Q is also stressed by Lee and Yeo (2015). The authors state that
organizational complexity and external financing needs strengthen this relationship.
Bernadi and Stark analyse the time period before and after the mandatory implemen-
tation of IR by the King III report and find that the positive relationship between ESG
performance scores and analyst forecast accuracy is strengthened by the reporting
regime change to IR 2010.

Referring to a worldwide sample, Arguelles et al. (2015) find a positive link between
IR quality (according to adherence to the IIRC framework principles) and the market
value of equity. Oshika and Saka (2015) observe that organizations operating in a
sustainable manner and publishing integrated reports differ from other types of orga-
nizations in the distribution of their added value as well as the robustness of their profit
levels. Mervelskemper and Streit (2015) stress that a higher and more favourable value
is placed on ESG performance if an organization publishes an ESG report. However,
an integrated report does not enhance ESG performance.

External corporate governance variables (e.g. the legal environment and investor
base) are evaluated in detail. Serafeim (2015) analyses IR in US firms and finds that an
organization’s capacity to demonstrate and communicate in a convincing manner that
it integrates the economic, social and environmental dimensions into its day-to-day
decision-making processes is linked to the long-term approach taken by its investor
base. Finally, Zhou (2015) prove that in South Africa, an inverse relationship exists
between the level of alignment of IR with the IIRC framework and analysts’ forecast
errors and the cost of equity, as well as a marginal inverse relationship between such
alignments with analysts’ earnings forecast dispersion.

A detailed list of the included studies can be found in Table 2.

3.2.3 Limitations and recommendations for further research

For the market level, multi-period observations, transnational comparisons and mul-
tivariate regression and sensitivity analyses for the robust and reliable measurement
of the factors of influence on IR are not always available. As for worldwide samples
and country-specific research, comparability of the studies is low with regard to the
discretionary power of management. Furthermore, organizations are often at different
stages concerning IR implementation (Beck et al. 2015), or they interpret this concept

123

286 P. Velte and M. Stawinoga

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th
e

Jo
ha
nn
es
bu
rg

S
to
ck

E
xc
ha
ng

e
(J
S
E
)

20
11

–2
01

3

IR
q
u
a
li
ty

E
Y
ex
ce
ll
en
ce

in
IR

aw
ar
ds

ra
nk

in
g

M
a
rk
et
re
a
ct
io
n
s
S
to
ck

li
qu
id
it
y
(B
id
-a
sk

sp
re
ad
s)
F
ir
m

va
lu
e

(T
ob

in
’s
Q
)

E
xp
ec
te
d
fu
tu
re

ca
sh

fl
ow

s
C
os
t
of

ca
pi
ta
l

(−
)

(+
)

(+
)

20
15

B
er
na
rd
ia
nd

S
ta
rk

W
or
ki
ng

pa
pe
r

S
ou

th
A
fr
ic
a

20
0
fi
rm

-y
ea
r

ob
se
rv
at
io
ns

on
th
e

JS
E

20
08

–2
01

2

IR
q
u
a
li
ty

E
nv
ir
on

m
en
ta
l,

so
ci
al
an
d

go
ve
rn
an
ce

di
sc
lo
su
re

tr
an
sp
ar
en
cy

sc
or
e

(i
nd

ex
)
(B

lo
om

be
rg

E
S
G
sc
or
es
)

M
a
rk
et
re
a
ct
io
n
s

A
na
ly
st
fo
re
ca
st

ac
cu
ra
cy

(+
) R
ep
or
ti
ng

re
gi
m
e

ch
an
ge

to
IR

20
10

as
a
m
od
er
at
or

(+
)

20
15

L
ee

an
d
Y
eo

R
ev
ie
w
of

Q
ua
nt
it
at
iv
e

F
in
an
ce

&
A
cc
ou

nt
in
g

S
ou
th

A
fr
ic
a

82
2
fi
rm

-y
ea
r

ob
se
rv
at
io
ns

on
th
e

JS
E

20
10

–2
01

3

IR
q
u
a
li
ty

IR
di
sc
lo
su
re

co
m
pl
ia
nc
e
(i
nd

ex
)

(S
ta
nd

ar
d
an
d

P
oo

r’
s
G
lo
ba
l

V
an
ta
ge
)

M
a
rk
et
re
a
ct
io
n
s

F
ir
m

va
lu
at
io
n

(T
ob

in
’s
Q
)

(+
)
O
rg
an
iz
at
io
na
l

co
m
pl
ex
it
y
an
d

ex
te
rn
al
fi
na
nc
in
g

ne
ed
s
as

m
od

er
at
or

va
ri
ab
le
s
(+
)

123

Integrated reporting: The current state of empirical… 287

T
ab

le
2

co
nt
in
ue
d

M
ar
ke
t
le
ve
l
(a
rc
hi
va
l)

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)

In
de
pe
nd
en
t
va
ri
ab
le

D
ep
en
de
nt

va
ri
ab
le

S
ig
ni
fi
ca
nt

re
su
lt
s

20
15

M
an
io
ra

Jo
ur
na
l
of

B
us
in
es
s

E
th
ic
s

W
or
ld
w
id
e

25
0–

28
0
co
m
pa
ni
es

20
02

–2
01

1

Im
p
le
m
en
ta
ti
o
n
o
f
IR

M
a
rk
et
re
a
ct
io
n
s

E
S
G
in
te
gr
at
io
n

(i
nt
eg
ra
te
d
th
in
ki
ng

,
in
te
gr
at
ed

m
an
ag
em

en
t
an
d

ov
er
al
l
in
te
gr
at
io
n

le
ve
l)
P
er
fo
rm

an
ce

(E
co
no
m
ic
,E

S
G

an
d
in
te
gr
at
ed

pe
rf
or
m
an
ce
)
(A

ss
et

fo
ur
)

(+
)
on

ly
co
m
pa
re
d

w
it
h
no

E
S
G

re
po

rt
er
s
an
d
E
S
G

re
po

rt
in
g
in

an
nu

al
re
po

rt
s

(−
)
co
m
pa
re
d
w
it
h

st
an
d-
al
on

e
E
S
G

re
po

rt
s

20
15

M
ar
ti
ne
z

W
or
ki
ng

pa
pe
r

S
ou

th
A
fr
ic
a

65
fi
rm

s
li
st
ed

on
th
e
JS
E
20

12
–2

01
4

IR
q
u
a
li
ty

L
ev
el
of

al
ig
nm

en
t

w
it
h
th
e
IR

fr
am

ew
or
k
(E
Y

ex
ce
ll
en
ce

in
IR

aw
ar
ds

ra
nk

in
g;

“T
op

10
”,

“E
xc
el
le
nt
”
or

“G
oo

d”
)

M
a
rk
et
re
a
ct
io
n
s

In
fo
rm

at
io
n

as
ym

m
et
ry

(r
at
io

of
th
e
sp
re
ad

bi
d-
as
k
to

th
e
cl
os
e
pr
ic
e)

(−
)
(o
nl
y
fo
r

no
n-
fi
na
nc
ia
l
fi
rm

s)

20
15

M
el
lo
ni

Jo
ur
na
l
of

In
te
ll
ec
tu
al

C
ap
it
al

W
or
ld
w
id
e

52
re
po

rt
s
in

th
e
IR

E
m
er
gi
ng

P
ra
ct
ic
e

E
xa
m
pl
es

D
at
ab
as
e

20
11

–2
01

3

F
ir
m
ch
a
ra
ct
er
is
ti
cs
:

D
ec
li
ni
ng

pe
rf
or
m
an
ce
,

en
vi
ro
nm

en
ta
l

se
ns
it
iv
e
in
du
st
ry
,

in
du
st
ry
,s
iz
e
an
d

in
ta
ng
ib
le
s

IR
q
u
a
li
ty

IR
to
ne

in
de
x

(s
co
re
)

D
ec
li
ni
ng

pe
rf
or
m
an
ce

(+
)

si
ze

(+
)

le
ve
l
of

in
ta
ng
ib
le
s

(+
)

123

288 P. Velte and M. Stawinoga

T
ab

le
2

co
nt
in
ue
d

M
ar
ke
t
le
ve
l
(a
rc
hi
va
l)

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)

In
de
pe
nd
en
t
va
ri
ab
le

D
ep
en
de
nt

va
ri
ab
le

S
ig
ni
fi
ca
nt

re
su
lt
s

20
15

M
er
ve
ls
ke
m
pe
r

an
d
S
tr
ei
t

W
or
ki
ng

pa
pe
r

W
or
ld
w
id
e

21
5
fi
rm

s
20

09
–2

01
4

IR
q
u
a
li
ty

E
nv
ir
on

m
en
ta
l,

so
ci
al
an
d

go
ve
rn
an
ce

(E
S
G
)

pe
rf
or
m
an
ce

(A
ss
et

fo
ur
)

M
a
rk
et
re
a
ct
io
n
s

M
ar
ke
t
va
lu
e
of

eq
ui
ty

E
S
G
pe
rf
or
m
an
ce

ge
ts
va
lu
ed

m
or
e

st
ro
ng

ly
an
d
in

th
e

po
si
ti
ve

di
re
ct
io
n

w
he
n
a
fi
rm

pu
bl
is
he
s
an

E
S
G

re
po
rt
,i
rr
es
pe
ct
iv
e

of
it
s
ty
pe

P
ub
li
sh
in
g
an

IR
do

es
no

t
re
su
lt
in

su
pe
ri
or

ou
tc
om

es
co
m
pa
re
d
to

a
se
pa
ra
te
re
po
rt

20
15

O
sh
ik
a
an
d
S
ak
a

W
or
ki
ng

pa
pe
r

W
or
ld
w
id
e

12
.3
45

fi
rm

s
20

12

Im
p
le
m
en
ta
ti
o
n
o
f
IR

S
us
ta
in
ab
le
fi
rm

s
w
it
h(
ou

t)
IR

D
is
tr
ib
ut
io
ns

to
st
ak
eh
ol
de
rs

(e
m
pl
oy
ee
s,

cr
ed
it
or
s,

go
ve
rn
m
en
t
an
d

sh
ar
eh
ol
de
rs
)

S
ta
bi
li
ty

of
pr
ofi

ta
bi
li
ty

(g
ro
ss

m
ar
gi
n,

E
B
IT

ra
ti
o,

ne
t
in
co
m
e
ra
ti
o,

R
O
E
an
d
R
O
A
)

V
al
ue

ad
de
d

in
fo
rm

at
io
n
an
d

st
ab
il
it
y
of

pr
ofi

ta
bi
li
ty

su
st
ai
na
bi
li
ty

ke
y

pe
rf
or
m
an
ce

in
di
ca
to
rs
of

IR

123

Integrated reporting: The current state of empirical… 289

T
ab

le
2

co
nt
in
ue
d

M
ar
ke
t
le
ve
l
(a
rc
hi
va
l)

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)

In
de
pe
nd
en
t
va
ri
ab
le

D
ep
en
de
nt

va
ri
ab
le

S
ig
ni
fi
ca
nt

re
su
lt
s

20
15

S
er
af
ei
m

Jo
ur
na
l
of

A
pp

li
ed

C
or
po

ra
te
F
in
an
ce

U
S
A

11
14

fi
rm

s
20

02
–2

01
0

L
on

g-
te
rm

in
ve
st
or

ba
se

(d
if
fe
re
nc
e

be
tw
ee
n
th
e

pe
rc
en
ta
ge

of
sh
ar
es

he
ld

by
de
di
ca
te
d

an
d
tr
an
si
en
t

in
ve
st
or
s)

M
a
rk
et
re
a
ct
io
n
s

C
om

pa
ny
’s
ca
pa
ci
ty

to
co
nv
in
ci
ng
ly

sh
ow

an
d

co
m
m
un
ic
at
e
th
at
it

in
te
gr
at
es

th
e

ec
on
om

ic
,s
oc
ia
l

an
d
en
vi
ro
nm

en
ta
l

di
m
en
si
on
s
in
to

it
s

da
y-
to
-d
ay
-d
ec
is
io
n

m
ak
in
g
pr
oc
es
se
s

(+
)

20
15

Z
ho

u
et
al
.

W
or
ki
ng

pa
pe
r

S
ou

th
A
fr
ic
a

44
3
ob

se
rv
at
io
ns

20
09

–2
01

2

IR
q
u
a
li
ty

L
ev
el
of

al
ig
nm

en
t

w
it
h
th
e
IR

fr
am

ew
or
k
(t
ot
al

di
sc
lo
su
re

sc
or
e)

M
a
rk
et
re
a
ct
io
n
s:

A
na
ly
st
s’
ea
rn
in
gs

fo
re
ca
st
er
ro
r
an
d

di
sp
er
si
on

C
os
t
of

eq
ui
ty

ca
pi
ta
l

(−
)

20
14

C
hu

re
t
an
d
E
cc
le
s

Jo
ur
na
l
of

A
pp

li
ed

C
or
po

ra
te
F
in
an
ce

W
or
ld
w
id
e

F
ir
m
s
fr
om

th
e

R
ob
ec
oS

A
M

da
ta
ba
se

20
11

–2
01

2

F
ir
m
ch
a
ra
ct
er
is
ti
cs

Q
ua
li
ty

of
ov
er
al
l

m
an
ag
em

en
t
of

E
S
G
is
su
es

(o
ve
ra
ll

an
nu

al
co
rp
or
at
e

su
st
ai
na
bi
li
ty

as
se
ss
m
en
t)

F
in
an
ci
al

pe
rf
or
m
an
ce

(r
et
ur
n

on
in
ve
st
ed

ca
pi
ta
l)

IR
q
u
a
li
ty

T
ot
al
sc
or
e
on

al
l

fo
ur

ex
am

pl
es

of
IR

E
S
G
m
an
ag
em

en
t
(+
)

123

290 P. Velte and M. Stawinoga

T
ab

le
2

co
nt
in
ue
d

M
ar
ke
t
le
ve
l
(a
rc
hi
va
l)

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)

In
de
pe
nd
en
t
va
ri
ab
le

D
ep
en
de
nt

va
ri
ab
le

S
ig
ni
fi
ca
nt

re
su
lt
s

20
14

F
ri
as
-A

ce
it
un
o
et

al
.

B
us
in
es
s
S
tr
at
eg
y
an
d

th
e
E
nv
ir
on

m
en
t

W
or
ld
w
id
e

15
90

co
m
pa
ni
es

20
08

–2
01

0

F
ir
m
ch
a
ra
ct
er
is
ti
cs

F
ir
m

si
ze
,

pr
ofi

ta
bi
li
ty
,

bu
si
ne
ss

se
ct
or
,

le
ve
l
of

co
nc
en
tr
at
io
n
in

th
e

bu
si
ne
ss

se
ct
or

an
d

gr
ow

th
op

po
rt
un

it
ie
s

Im
p
le
m
en
ta
ti
o
n
o
f
IR

S
iz
e
(+
)

P
ro
fi
ta
bi
li
ty

(+
)

C
on

ce
nt
ra
ti
on

(−
)

20
14

L
ai
et
al
.

B
us
in
es
s
S
tr
at
eg
y
an
d

th
e
E
nv
ir
on

m
en
t

W
or
ld
w
id
e

52
II
R
C
pi
lo
t

pr
og

ra
m

m
em

be
rs

an
d
52

no
n-
ad
op

te
rs

20
09

–2
01

1

F
ir
m
ch
a
ra
ct
er
is
ti
cs

E
S
G
di
sc
lo
su
re

ra
ti
ng
s,
F
ir
m

si
ze
,

le
ve
ra
ge
,

pr
ofi

ta
bi
li
ty

an
d

en
vi
ro
nm

en
ta
ll
y

se
ns
it
iv
e
in
du
st
ri
es

Im
p
le
m
en
ta
ti
o
n
o
f
IR

E
S
G
di
sc
lo
su
re

ra
ti
ng

s
(+
)

F
ir
m

si
ze

(-
)

P
ro
fi
ta
bi
li
ty

(−
)

In
du

st
ry

(−
)

20
14

M
io

an
d
F
as
an

W
or
ki
ng

pa
pe
r

W
or
ld
w
id
e

65
II
R
C
pi
lo
t

pr
og

ra
m

m
em

be
rs

20
13

F
ir
m
ch
a
ra
ct
er
is
ti
cs

B
ra
nc
h
of

in
du

st
ry

C
or
po

ra
te

go
ve
rn
an
ce
:
bo

ar
d

si
ze
,b

oa
rd

in
de
pe
nd

en
ce
,b
oa
rd

ac
ti
vi
ty

an
d
ge
nd
er

bo
ar
d
di
ve
rs
it
y

IR
q
u
a
li
ty

M
at
er
ia
li
ty

di
sc
lo
su
re

B
ra
nc
h
of

in
du

st
ry

(+
)

123

Integrated reporting: The current state of empirical… 291

T
ab

le
2

co
nt
in
ue
d

M
ar
ke
t
le
ve
l
(a
rc
hi
va
l)

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)

In
de
pe
nd
en
t
va
ri
ab
le

D
ep
en
de
nt

va
ri
ab
le

S
ig
ni
fi
ca
nt

re
su
lt
s

20
13

F
ri
as
-A

ce
it
un
o
et

al
.(
a)

Jo
ur
na
l
of

C
le
an
er

P
ro
du

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io
n

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or
ld
w
id
e

75
0
fi
rm

s
20

08
–2

01
0

C
o
rp
o
ra
te

g
ov
er
n
a
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ce

C
iv
il
la
w
co
un

tr
y

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ou
nt
ry
’s
le
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l

fr
am

ew
or
k
(i
nd

ex
of

ef
fi
ci
en
cy

of
th
e

le
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l
sy
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em

an
d
th
e

in
de
x
of

la
w
an
d

or
de
r)

Im
p
le
m
en
ta
ti
o
n
o
f
IR

(+
)

20
13

F
ri
as
-A

ce
it
un
o
et

al
.(
b)

C
or
po

ra
te
S
oc
ia
l

R
es
po
ns
ib
il
it
y
an
d

E
nv
ir
on

m
en
ta
l

M
an
ag
em

en
t

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or
ld
w
id
e

56
8
no

n-
fi
na
nc
ia
l

m
ul
ti
na
ti
on
al

co
m
pa
ni
es

20
08

–2
01

0

C
o
rp
o
ra
te

g
ov
er
n
a
n
ce
:

B
oa
rd

si
ze
,

pe
rc
en
ta
ge

of
no

n-
ex
ec
ut
iv
e

di
re
ct
or
s,
nu

m
be
r
of

bo
ar
d
m
ee
ti
ng

s,
fo
re
ig
n
an
d
ge
nd

er
di
ve
rs
it
y

Im
p
le
m
en
ta
ti
o
n
o
f
IR

B
oa
rd

si
ze

(+
)

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iv
er
si
ty

(+
)

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om

pa
ny

si
ze

(+
)

20
13

G
ar
ci
a-
S
án
ch
ez

et
al
.

In
te
rn
at
io
na
l
B
us
in
es
s

R
ev
ie
w

W
or
ld
w
id
e

15
90

no
n-
fi
na
nc
ia
l

m
ul
ti
na
ti
on
al

co
m
pa
ni
es

20
08

–2
01

0

C
u
lt
u
re

C
ol
le
ct
iv
is
m

F
em

in
is
m

T
ol
er
an
ce

of
un
ce
rt
ai
nt
y
P
ow

er
di
st
an
ce

Im
p
le
m
en
ta
ti
o
n
o
f
IR

C
ol
le
ct
iv
is
m

(+
)

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em

in
is
m

(+
)

F
ir
m

si
ze

(+
)

P
ro
fi
ta
bi
li
ty

(+
)

123

292 P. Velte and M. Stawinoga

T
ab

le
2

co
nt
in
ue
d

M
ar
ke
t
le
ve
l
(a
rc
hi
va
l)

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)

In
de
pe
nd
en
t
va
ri
ab
le

D
ep
en
de
nt

va
ri
ab
le

S
ig
ni
fi
ca
nt

re
su
lt
s

20
12

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ns
en

an
d
B
er
g

B
us
in
es
s
S
tr
at
eg
y
an
d

th
e
E
nv
ir
on

m
en
t

W
or
ld
w
id
e

20
4
IR

co
m
pa
ni
es

fr
om

th
e
G
R
I

R
ep
or
ts
L
is
t
20

09

C
o
rp
o
ra
te

g
ov
er
n
a
n
ce

C
iv
il

la
w
co
un

tr
y,

in
ve
st
or

pr
ot
ec
ti
on

,
em

pl
oy
m
en
t

pr
ot
ec
ti
on

,m
ar
ke
t

or
ie
nt
at
io
n,

ow
ne
rs
hi
p

co
nc
en
tr
at
io
n,

sh
ar
e

of
pr
iv
at
e

ex
pe
nd
it
ur
es
,

de
ns
it
y
of

tr
ad
e

un
io
ns
,n
at
io
na
l

co
rp
or
at
e

re
sp
on
si
bi
li
ty
,v
al
ue

of
se
lf
-e
xp

re
ss
io
n,

se
cu
la
r-
ra
ti
on
al

va
lu
e
an
d
ec
on

om
ic

de
ve
lo
pm

en
t

Im
p
le
m
en
ta
ti
o
n
o
f
IR

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ve
st
or

pr
ot
ec
ti
on

(+
)

E
m
pl
oy
m
en
t

pr
ot
ec
ti
on

la
w
(−

)
M
ar
ke
t
or
ie
nt
at
io
n

(+
)

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is
pe
rs
ed

ow
ne
rs
hi
p

st
ru
ct
ur
es

(+
)

S
ha
re

of
pr
iv
at
e

ex
pe
nd

it
ur
es

fo
r

te
rt
ia
ry

ed
uc
at
io
n

(+
)

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ra
de

un
io
n
de
ns
it
y

(+
)

L
ev
el
of

en
vi
ro
nm

en
ta
l
an
d

so
ci
al
de
ve
lo
pm

en
t

(+
)

L
ev
el
of

se
cu
la
r-
ra
ti
on
al

va
lu
es

(+
)

D
ev
el
op
ed

co
un
tr
ie
s

(+
)

123

Integrated reporting: The current state of empirical… 293

in a different manner. Therefore, the quality of IR is not standardized in contrast to the
casuistic guidelines of the GRI in CSR reporting. Neither this heterogeneous report
quality nor the different interpretations of IR are taken into consideration by empirical
studies, especially at the market-level, so their external validity is limited. How then
can stakeholders know about the “real” integration of IR processes and embedding in
an organization’s management control system? Hence, future archival research activi-
ties in the context of IR should consider these aspects. Another key aspect is the impact
of different cultures in different countries on IR practice, with special reference to the
risk of litigation (Morros 2016). Garcia-Sánchez et al. (2013) is the only study so
far that analyses the influence of culture on the implementation of IR. However, the
four culture aspects referring to the famous model by Hofstede should be extended
in future research. As the latest empirical studies analyse the link between IR quality
and market reactions (e.g. Barth et al. 2015), the concentration on South Africa is not
useful because of its limited validity. A worldwide sample should be the major task
for future research (e.g. Arguelles et al. 2015). The current measurement of IR quality
is also questionable. Referring to the IR awards ranking by Ernst and Young, or to
ESG performance by databases (e.g. Asset 4), is connected with a limited validity. In
most cases, the rankings have a “black box” characteristic because the specific rating
criteria are not published by the selling institutions. Hence, the IIRC should consider
implementing a “checklist” in the framework to standardize IR.

3.3 Organizational level

3.3.1 Institutional theory

According to institutional theory, the activities performed by different types of orga-
nizations are embedded in a social framework stipulating relevant norms and values
(Oliver 1997). This theory suggests that organizations favour structures and manage-
ment processes previously adopted or accepted by similar organizations rather than
considering their inherent benefits for the specific organization. Thus, structures and
practices are legitimized through tradition, imitation, coercion and normative pressure,
and there exists an inverse relationship between the diversity of an organization’s oper-
ating environment and such external legitimization. Structures, values and procedures
are chosen in line with social acceptance within the segment rather than based on
their impact on organizational efficiency (DiMaggio and Powell 1983). The resulting
coercive, mimetic or normative assimilation is institutionalized. Organizations oper-
ating in a given field become increasingly homogenous and employ similar structures
and business practices (Fernando and Lawrence 2014). Consequently, organizations
need to compete on issues such as their social standing and public perception of their
environmental policies.

Institutional practices such as voluntary IR are linked to a society’s values, norms
and boundaries. According to institutional theory, IR may therefore connect an orga-
nization to the society in which it operates, facilitating its (continued) legitimization.
This theory suggests that an organization is motivated to publish an integrated report by
its drive to conform. Consequently, selective disclosure would focus on performance

123

294 P. Velte and M. Stawinoga

indicators and procedures that provide a permanent link between financial and non-
financial issues. With this approach, there is a risk that an organization’s IR might fail
to provide a true and fair view of actual organizational performance (Deegan 2009).

3.3.2 Resource dependency theory

According to resource dependency theory (Grant 1991), an entity is a conglomerate of
specific material and immaterial resources as well as human and financial resources,
including ESG resources. Based on this theoretical aspect, a description of an entity’s
individual resource endowment illustrates the competitive advantages and strategies
which are decisive for a company’s above-average profits. Furthermore, sustainably
and reliably acting companies have regularly better access to vital resources for long-
term survival. The conception of IR is characterized by similarities with resource
dependency theory. On the one hand, according to resource dependency theory, the
presentation of multiple capitals (especially intellectual, human, social and relation-
ship as well as natural capital) in the IIRC framework is linked to the concept of a
variety of vital resources affecting the entity’s activities and growth. On the other hand,
the general objective of an integrated report is to describe the main aspects of long-
term value creation based on the crucial competitive advantages and strategies also
demonstrating the possibilities ensuring the continuous supply of relevant resources
to the entity. This purpose of IR is based upon general assumptions of resource depen-
dency theory, which states that a crucial function of a company is to gain access to
vital resources (Chen and Roberts 2010).

3.3.3 Empirical research

Implementation of IR
Organizational level analyses are typically based on surveys, case studies, interviews
or similar qualitative research methods (Cohen and Simnett 2015) and focus on internal
decision-making processes, management perceptions and quality issues. This includes
internal processes and actions, institutional processes, their effect on IR and vice versa.
In many ways, according to resource dependency theory, management assumes that IR
is a major aspect of future success, but intrinsic management motivation is necessary
in view of the voluntary basis of IR.

Most of the existing studies concentrate on the decision to implement IR and not
on IR quality. In contrast to the analyses at the market level, worldwide samples are
seldom. Lueg et al. (2016) conducted a case study of a Danish carpet manufacturer
and analysed the supporting role of CSR reporting in implementing IR. The authors
point out that the company identifies the IR movement as an opportunity to merge
current sub-reports, use less technical language and concentrate on material reporting
aspects to increase decision usefulness for stakeholders. Despite the long history of
CSR reporting, a full match between annual reports and CSR reports has not been
reached so far. Turturea (2015) also focuses on the IR practices of Danish companies.
Responsible actions regarding ESG issues demonstrate a more visible, transparent and
active approach, helping companies enhance their performance.

123

Integrated reporting: The current state of empirical… 295

Other case studies concentrate on the reporting processes and practices and on
the regulatory and institutional backgrounds of particular organizations. Tweedie and
Martinov-Bennie (2015) concentrate on the differences between IR and CSR reporting
by analysing press releases and frameworks by the IIRC, GRI, A4S and the King
Committee on corporate governance. The authors come to the conclusion that IR and
CSR reporting represent different concepts because the key tenets of traditional CSR
reporting frameworks are no longer relevant. According to Stubbs and Higgins (2014),
Australian organizations adopting IR are either planning to change their processes and
structures or have already initiated this change process. However, their adoption of IR
has not necessarily stimulated new innovations in disclosure mechanisms with regard
to resource dependency theory.

In a case study, Lodhia (2015) draws the conclusion that IR is a complex process
involving a sequence of activities rather than merely an outcome in the form of an
integrated report. Surveys and interviews are used as alternative qualitative empirical
research methods as they attempt to gather detailed information about the perceptions
held by management about their company’s adoption of IR and its operationalization.
Robertson and Samy (2015) come to the conclusion that senior managers in the UK
perceive IR as providing a relative advantage over existing practices, that they are
supportive of IR and that they have started to integrate their reporting in line with
IR guidelines. Higgins et al. (2014) state that the two main narratives dominating
managers’ experiences in Australia are IR as a form of story-telling and IR as the
meeting of expectations. Finally, Bommel (2014) considers a Dutch sample and comes
to the conclusion that IR contains elements of civic, green, market and industrial
orders of worth. It is difficult to position IR as a permanent legitimate compromise
since it contradicts the underlying principle of finding a common interest, avoiding
clarification and maintaining ambiguity. Steyn (2014) finds that the advancement of
corporate reputation appears to be a key motive for listed South African companies
to publish an integrated report, second only to compliance. With respect to Australia,
Stubbs et al. (2015) remark that the notion of the six forms of capital and the associated
operationalization for successful IR are neither well developed nor accepted, while
the underlying rationale for IR is.

Rowbottom and Locke (2016) interview representatives of worldwide IR firms to
explain the reasons for the emergence of IR. To their mind, IR can be classified as a
reactiontoincreasedstakeholderexpectations(reportingcomplexityandimmateriality
and an acceptable ESG reporting framework for investors) and one of the key resources
for future success.

IR quality

In accordance with market level studies, qualitative research at the organizational level
also includes the factors influencing IR quality. Pozzoli and Gesuele (2016) conduct
a case study in 11 public utilities participating in the IIRC pilot programme in Italy
and focus on the level of IR accountability. The authors claim that although the firms
do not fulfil the principle of conciseness in their IR, their reports have a high level
of consensus. Havlova (2015) analyses 48 firms in the pilot programme and finds a
decrease in the number of reports after the IR implementation, although the firms
did not publish only “one report”. Some studies also concentrate on South African

123

296 P. Velte and M. Stawinoga

reporting practices. Clayton et al. (2015) state that most of the eight companies they
examined had successfully integrated CSR into their business operation and reporting.
Infewcases,itappearedthatthecompanieshadsimplytakentheinformationcontained
in the traditional CSR report and transferred it to the integrated report for “labelling”.
According to Setia et al. (2015), companies in South Africa disclosure significantly
moreinformationonsocialandrelationalcapitalintheirintegratedreports(2011/2012)
than in their annual reports (2009/2010). Furthermore, companies with below-average
disclosure levels in 2009/2010 showed the greatest disclosure increases. Marx and
Mohammadali-Haji (2014) recognize that the quality of IR is very heterogeneous in
South Africa and that some firms merely renamed their annual reports as integrated
reports to create the appearance of compliance with the developments of IR and not
be considered as trailing behind. Much variation in the form and content of IR and the
need for compliance with uniform reporting standards still exist.

Stent and Dowler (2015) analyse four “best practice reporting” firms in New
Zealand and found an adequate IR quality score, ranging from 70 to 87 %. The
authors stress that IR processes lack integration, oversight and due attention to future
uncertainties. Lipunga (2015) measures an average IR reporting index of 43 % in
Malawi. Finally, Eccles and Serafeim (2015) point out that the high-level, principle-
based framework of the IIRC enables companies to determine the most material issues
through stakeholder engagement and then to continue the engagement process.

A detailed list of the included studies can be found in Table 3.

3.3.4 Limitations and recommendations for future research

Organizational studies also use a so-called “IR disclosure index”, which analyses
the quality of published IR based upon typical elements of an IR. As we already
mentioned, the IIRC framework is principle based, and hence the use of a standardized
quality index is based on subjective judgements and bias problems. By composing the
IR index, many studies give equal weights to each of the content elements of IR.
Thus, future studies should first analyse the preferences of stakeholders by ranking
the importance of the central elements of an IR before calculating an IR quality score.
Another critical point is the operationalization of the reporting principles of the IIRC
framework. The materiality principle is central to the whole risk management process
in the company and has a strong link to financial and nonfinancial reporting. The
decision to implement IR implies the main consequences for firm risk (Morros 2016).
Future research should consider the risk inherent in setting management expectations
about the future development. Furthermore, former studies focus on a single country. It
would be much better to have worldwide samples (e.g. Rowbottom and Locke 2016) to
analysetheimpactofcountry-specificfactorsonmanagementperceptions.Withregard
to CSR reporting, previous studies claim that the relationship between accounting
departments and CSR departments in firms is often not very tight (Schaltegger and
Zvezdov 2015). For successful IR, it seems to be crucial to establish a reorganization
of the reporting systems. From a short-term perspective, the implementation of IR will
lead to increased costs and could harm management incentives. Currently, we know
very little about the additional costs of realizing integrated thinking. Future research
should address these important factors too.

123

Integrated reporting: The current state of empirical… 297

T
ab

le
3

E
m
pi
ri
ca
l
IR

st
ud
ie
s
on

th
e
or
ga
ni
za
ti
on
al
le
ve
l

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
16

L
ue
g
et
al
.

C
or
po

ra
te

C
om

m
un

ic
at
io
ns

D
en
m
ar
k

C
S
R
an
d
an
nu

al
re
po

rt
s
of

th
e
ca
rp
et

m
an
uf
ac
tu
re
r
E
G
E

20
09

–2
01

3
C
as
e

st
ud

y/
in
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

S
up

po
rt
in
g
ro
le
of

C
S
R
re
po

rt
in
g

E
G
E
w
en
t
be
yo

nd
co
m
pl
yi
ng

w
it
h
th
e

gu
id
el
in
es

by
m
er
gi
ng

su
b-
re
po
rt
s,
us
in
g

le
ss

te
ch
ni
ca
l

la
ng

ua
ge

an
d

fo
cu
si
ng

on
th
e
m
os
t

m
at
er
ia
l
in
fo
rm

at
io
n

E
G
E
di
d
no
t
m
er
el
y

m
er
ge

it
s
an
nu
al

re
po
rt
w
it
h
it
s
C
S
R

re
po

rt
(l
on

g
hi
st
or
y

w
it
h
se
pa
ra
te
C
S
R
)

R
eg
ul
at
or
s
sh
ou

ld
no
t
st
ic
k
to

a
m
an
da
to
ry

si
ng

le
do

cu
m
en
t

20
16

P
oz
zo
li
an
d
G
es
ue
le

B
oo

k
ch
ap
te
r

It
al
y

11
pu
bl
ic
ut
il
it
ie
s

pa
rt
ic
ip
at
in
g
in

th
e

pi
lo
t
pr
og

ra
m
m
e

an
d
ha
vi
ng

pu
bl
ic

se
ct
or

ow
ne
rs
hi
p

C
as
e
st
ud
y

IR
q
u
a
li
ty

L
ev
el
of

ac
co
un
ta
bi
li
ty

R
el
at
io
ns
hi
p
be
tw
ee
n

re
po

rt
le
ng

th
an
d
th
e

ad
ju
st
ed

to
ta
l
m
ar
ks

(n
o
re
sp
ec
t
fo
r
th
e

pr
in
ci
pl
e
of

co
nc
is
en
es
s)

123

298 P. Velte and M. Stawinoga

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
16

R
ow

bo
tt
om

an
d

L
oc
ke

A
cc
ou

nt
in
g
an
d

B
us
in
es
s
R
es
ea
rc
h

W
or
ld
w
id
e

11
pa
rt
ic
ip
an
ts
(e
.g
.

C
E
O
an
d
he
ad

of
C
S
R
de
pa
rt
m
en
t)

20
12

-2
01

3
In
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

E
xp

la
in
in
g
th
e

re
as
on

fo
r
th
e

em
er
ge
nc
e
of

IR

II
R
C
in
it
ia
ti
ve

w
as

im
po

rt
an
t
in

a)
en
ab
li
ng

th
e
II
R
C

to
pr
ov
id
e
a

pe
rc
ei
ve
d
so
lu
ti
on

to
th
os
e
ac
to
rs
w
ho

so
ug
ht

to
ca
pi
ta
li
ze

on
re
gu

la
to
ry

in
te
re
st
in

S
ou
th

A
fr
ic
a
an
d

el
se
w
he
re
;

b)
ad
dr
es
si
ng

co
nc
er
ns

ov
er

re
po

rt
in
g

co
m
pl
ex
it
y
an
d

im
m
at
er
ia
li
ty
;

an
d
c)

m
ee
ti
ng

th
e

gr
ow

in
g
de
m
an
d
fo
r

an
in
te
rn
at
io
na
l

E
S
G
re
po

rt
in
g

fr
am

ew
or
k

ac
ce
pt
ab
le
to

th
e

in
ve
st
or

co
m
m
un
it
y

123

Integrated reporting: The current state of empirical… 299

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

C
la
yt
on

et
al
.

B
ul
le
ti
n
of

G
eo
gr
ap
hy

S
ou
th

A
fr
ic
a

8
fi
rm

s
on

th
e
JS
E

20
08

-2
01

3
C
as
e
st
ud
y

IR
q
u
a
li
ty

In
de
x
(n
um

be
r
of

re
po
rt
s,
re
po
rt
ti
tl
e,

le
ng

th
of

re
po

rt
,

st
at
ed

in
te
nt
io
n
an
d

st
ru
ct
ur
e)

M
os
t
co
m
pa
ni
es

ha
d

su
cc
es
sf
ul
ly

w
ov
en

su
st
ai
na
bi
li
ty

is
su
es

in
to

th
ei
r
bu
si
ne
ss

an
d
in
te
gr
at
ed

th
es
e

is
su
es

ac
ro
ss

th
ei
r

re
po

rt
in
g.
In

a
fe
w

ca
se
s,
it
ap
pe
ar
ed

th
at
co
m
pa
ni
es

ha
d

si
m
pl
y
ta
ke
n
th
e

in
fo
rm

at
io
n
fr
om

th
e
tr
ad
it
io
na
l
C
S
R

re
po

rt
an
d
pl
ac
ed

it
w
it
hi
n
th
e
IR

20
15

E
cc
le
s
an
d
S
er
af
ei
m

B
oo
k
ch
ap
te
r

U
S
A

C
oc
a
C
ol
a
H
el
le
ni
c

B
ot
tl
in
g
C
om

pa
ny

20
13

C
as
e
st
ud
y

IR
q
u
a
li
ty

E
le
m
en
ts
of

an
ef
fe
ct
iv
e
IR

an
d
ro
le

of
re
gu

la
ti
on

in
IR

in
th
e

A
ng
lo
-A

m
er
ic
an

co
nt
ex
t

T
he

hi
gh

-l
ev
el

pr
in
ci
pl
es
-b
as
ed

fr
am

ew
or
k
of

th
e

II
R
C
en
ab
le
s

co
m
pa
ni
es

to
de
te
rm

in
e
th
e
m
os
t

m
at
er
ia
l
is
su
es

th
ro
ug

h
st
ak
eh
ol
de
r

en
ga
ge
m
en
t
an
d

th
en

to
co
nt
in
ue

th
e

en
ga
ge
m
en
t
pr
oc
es
s

123

300 P. Velte and M. Stawinoga

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

H
av
lo
va

P
ro
ce
di
a
E
co
no

m
ic
s

an
d
F
in
an
ce

W
or
ld
w
id
e

48
fi
rm

s
fr
om

th
e

II
R
C
pi
lo
t

pr
og

ra
m
m
e
be
fo
re

20
12

20
10

-2
01

4
C
as
e
st
ud
y

IR
q
u
a
li
ty

F
ul
l
ad
op

ti
on

of
IR

In
fo
rm

at
io
n

te
ch
no

lo
gy

fo
r
IR

W
it
h
gr
ea
te
r
ad
op
ti
on

of
IR

,t
he

nu
m
be
r
of

re
po

rt
s
is

de
cr
ea
si
ng
,

al
th
ou

gh
th
e
fi
rm

s
st
il
l
pu
bl
is
h
m
or
e

th
an

on
e
di
sc
lo
su
re

an
d
IT

is
m
or
e

w
id
el
y
us
ed

20
15

L
ip
un
ga

Jo
ur
na
l
of

M
an
ag
em

en
t

R
es
ea
rc
h

M
al
aw

i
12

fi
rm

s
on

th
e

M
al
aw

i
S
to
ck

E
xc
ha
ng

e
20

13
C
as
e
st
ud
y

IR
q
u
a
li
ty

In
de
x
(a
cc
or
di
ng

to
th
e
di
sc
lo
su
re

it
em

s
an
d
IR

he
ad
in
gs
)

A
ve
ra
ge

IR
in
de
x
of

0.
43

20
15

L
od

hi
a

Jo
ur
na
l
of

B
us
in
es
s

E
th
ic
s

A
us
tr
al
ia

In
te
rv
ie
w
s
of

th
e

ge
ne
ra
l
m
an
ag
er

op
er
at
io
ns

an
d
ri
sk
,

de
ve
lo
pm

en
t
an
d

co
rp
or
at
e
se
rv
ic
es

an
d
C
S
R
of
fi
ce
r
of

G
oo

db
an
k

C
as
e
st
ud
y

Im
p
le
m
en
ta
ti
o
n
o
f
IR

C
S
R
co
nt
ex
t

IR
pr
ac
ti
ce

IR
dr
iv
er
s

IR
as

a
co
m
pl
ex

pr
oc
es
s
in
vo
lv
in
g
a

se
qu
en
ce

of
ac
ti
vi
ti
es

ra
th
er

th
an

m
er
el
y
an

ou
tc
om

e
in

th
e
fo
rm

of
an

in
te
gr
at
ed

re
po

rt

123

Integrated reporting: The current state of empirical… 301

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

R
ob

er
ts
on

an
d
S
am

y
S
us
ta
in
ab
il
it
y

A
cc
ou

nt
in
g,

M
an
ag
em

en
t
&

P
ub
li
c
Jo
ur
na
l

U
K 2
2
U
K
F
T
S
E
10
0

fi
rm

s
an
d
10

se
ni
or

m
an
ag
er
s

In
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

O
ff
er
in
g
a
re
la
ti
ve

ad
va
nt
ag
e
ov
er

ex
is
ti
ng

pr
ac
ti
ce
s

C
om

pa
ti
bi
li
ty

to
ex
is
ti
ng

or
ga
ni
za
ti
on
al

va
lu
es
,p

as
t

ex
pe
ri
en
ce
s
an
d

ne
ed
s

P
er
ce
iv
ed

co
m
pl
ex
it
y
ca
us
ed

by
th
e
ad
op

ti
on

an
d

di
ff
us
io
n
of

IR

S
en
io
r
m
an
ag
er
s

pe
rc
ei
ve

IR
as

ha
vi
ng

a
re
la
ti
ve

ad
va
nt
ag
e
ov
er

ex
is
ti
ng

pr
ac
ti
ce

T
he
y
ar
e
su
pp

or
ti
ve

of
IR

an
d
st
ar
te
d
to

in
te
gr
at
e
th
ei
r

re
po

rt
in
g
al
on

g
IR

gu
id
el
in
es

20
15

S
et
ia
et
al
.

S
us
ta
in
ab
il
it
y

A
cc
ou

nt
in
g,

M
an
ag
em

en
t
&

P
ub
li
c
Jo
ur
na
l

S
ou
th

A
fr
ic
a

25
la
rg
es
t

co
m
pa
ni
es

on
th
e

JS
E
20

09
–2

01
2

C
as
e
st
ud
y

IR
q
u
a
li
ty

E
xt
en
t
of

di
sc
lo
su
re

of
fo
ur

IR
ca
pi
ta
ls

C
om

pa
ni
es

di
sc
lo
se

si
gn
ifi
ca
nt
ly

m
or
e

in
fo
rm

at
io
n
on

so
ci
al
an
d
re
la
ti
on
al

ca
pi
ta
l
in

in
te
gr
at
ed

re
po

rt
s
(2
01

1/
12

)
co
m
pa
re
d
to

an
nu

al
re
po

rt
s
(2
00

9/
20

10
)

C
om

pa
ni
es

th
at

sh
ow

th
e
gr
ea
te
st

le
ve
l
of

in
cr
em

en
t
in

di
sc
lo
su
re

ar
e
th
os
e

w
ho

ha
d

be
lo
w
-a
ve
ra
ge

di
sc
lo
su
re
s
in

20
09

/1
0

123

302 P. Velte and M. Stawinoga

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

S
te
nt

an
d
D
ow

le
r

M
ed
it
ar
i
A
cc
ou
nt
an
cy

R
es
ea
rc
h

N
ew

Z
ea
la
nd

4
“b
es
t

pr
ac
ti
ce

re
po

rt
in
g”

fi
rm

s
20

11
S
ur
ve
y

IR
q
u
a
li
ty
:

C
he
ck
li
st
(i
nd

ex
)

R
ep
or
ti
ng

sc
or
es

ra
ng

e
fr
om

70
to

87
%

C
ur
re
nt

IR
pr
oc
es
se
s
la
ck

th
e

in
te
gr
at
io
n,

ov
er
si
gh

t
an
d
du

e
at
te
nt
io
n
to

fu
tu
re

un
ce
rt
ai
nt
ie
s

re
qu

ir
ed

by
IR

20
15

S
tu
bb
s
et
al
.

W
or
ki
ng

pa
pe
r

A
us
tr
al
ia

6
pr
ov
id
er
s
of

fi
na
nc
ia
l
ca
pi
ta
l

(p
ar
ti
ci
pa
nt
s
of

th
e

II
R
C
pi
lo
t
pr
og

ra
m

in
ve
st
or

ne
tw
or
k)

20
14

In
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

Is
su
es

w
it
h
cu
rr
en
t

re
po

rt
in
g

ap
pr
oa
ch
es

B
en
efi

ts
an
d

ou
tc
om

es
of

IR
B
ar
ri
er
s
to

an
d

ch
al
le
ng
es

of
IR

U
se

of
IR

an
d
si
x

ca
pi
ta
ls
in

de
ci
si
on

m
ak
in
g

W
hi
le
th
e
ra
ti
on
al
e
fo
r

IR
is
w
el
l
de
ve
lo
pe
d

an
d
ac
ce
pt
ed
,t
he

no
ti
on

of
si
x

ca
pi
ta
ls
an
d
it
s

op
er
at
io
na
li
za
ti
on

is
no

t

123

Integrated reporting: The current state of empirical… 303

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

T
ur
tu
re
a

S
E
A
–
P
ra
ct
ic
al

A
pp
li
ca
ti
on

of
S
ci
en
ce

D
en
m
ar
k

N
ov
o
N
or
di
sk

C
as
e
st
ud
y

Im
p
le
m
en
ta
ti
o
n
o
f
IR

E
vo
lu
ti
on

of
a

co
m
pa
ny
’s

pe
rf
or
m
an
ce

to
it
s

re
po
rt
in
g
pr
ac
ti
ce

R
es
po

ns
ib
le
ac
ti
on

s
di
re
ct
ed

to
w
ar
ds

so
ci
al
an
d

en
vi
ro
nm

en
ta
l

ca
us
es

de
m
on
st
ra
te

a
m
or
e
vi
si
bl
e,

tr
an
sp
ar
en
t
an
d

ac
ti
ve

si
de

of
a

bu
si
ne
ss

w
hi
ch

he
lp
s
co
m
pa
ni
es

in
ac
hi
ev
in
g
hi
gh

er
pe
rf
or
m
an
ce

20
15

T
w
ee
di
e
an
d

M
ar
ti
no
v-
B
en
ni
e

S
oc
ia
l
an
d

E
nv
ir
on

m
en
ta
l

A
cc
ou
nt
ab
il
it
y

Jo
ur
na
l

S
ou
th

A
fr
ic
a

P
ub
li
c
re
le
as
es

an
d

fr
am

ew
or
ks

by
II
R
C
,G

R
I,
A
4S

an
d

K
in
g
C
om

m
it
te
e
on

C
or
po

ra
te

go
ve
rn
an
ce

20
00

-2
01

3
C
as
e
st
ud
y

Im
p
le
m
en
ta
ti
o
n
o
f
IR

D
if
fe
re
nc
es

of
IR

in
co
m
pa
ri
so
n
to

C
S
R

re
po

rt
in
g

IR
m
ov
es

aw
ay

fr
om

th
re
e
ke
y
te
ne
ts
of

pr
io
r
C
S
R
re
po

rt
in
g

fr
am

ew
or
ks

by
pr
iv
il
eg
in
g

a)
co
m
m
un

ic
at
io
n

ov
er

ho
ld
in
g

or
ga
ni
za
ti
on
s

ac
co
un
ta
bl
e,

b)
or
ga
ni
za
ti
on
al

ov
er

so
ci
al

su
st
ai
na
bi
li
ty

an
d

c)
en
ti
tl
em

en
ts
of

pr
ov
id
er
s
of

fi
na
nc
ia
l
ca
pi
ta
l

ov
er

ot
he
r

st
ak
eh
ol
de
rs

123

304 P. Velte and M. Stawinoga

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
14

B
om

m
el

A
cc
ou

nt
in
g,
A
ud

it
in
g

&
A
cc
ou
nt
ab
il
it
y

Jo
ur
na
l

T
he

N
et
he
rl
an
ds

64
ac
to
rs
(p
ub

li
c

se
ct
or
,c
iv
il
so
ci
et
y,

in
ve
st
m
en
t

co
m
m
un

it
y,

re
po
rt
in
g
fi
rm

s,
ac
ad
em

ic
s
an
d

pr
of
es
si
on
al

se
rv
ic
es

fi
rm

s)
In
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

R
at
io
na
li
ti
es

or
va
lu
e
ar
ti
cu
la
ti
on

s
(i
.e
.o
rd
er
s
of

w
or
th
)

P
os
si
bi
li
ty

to
at
te
m
pt

to
fo
rg
e
a

le
gi
ti
m
at
e

co
m
pr
om

is
e
am

on
g

th
es
e
m
ul
ti
pl
e

or
de
rs
of

w
or
th

an
d

th
e
di
ffi
cu
lt
ie
s

im
pl
ie
d

C
on

se
qu

en
ce
s
of

cu
rr
en
t
at
te
m
pt
s
to

co
m
pr
om

is
e
in

IR

IR
co
nt
ai
ns

el
em

en
ts

of
ci
vi
c,
gr
ee
n,

m
ar
ke
t
an
d

in
du

st
ri
al
or
de
rs
of

w
or
th

It
is
di
ffi
cu
lt
to

po
si
ti
on

IR
as

a
du
ra
bl
e
le
gi
ti
m
at
e

co
m
pr
om

is
e
si
nc
e
it

vi
ol
at
es

th
e

pr
in
ci
pl
e

m
ec
ha
ni
sm

s
of

fi
nd

in
g
a
co
m
m
on

in
te
re
st
,a
vo
id
in
g

cl
ar
ifi
ca
ti
on

an
d

m
ai
nt
ai
ni
ng

am
bi
gu

it
y

20
14

H
ig
gi
ns

et
al
.

A
cc
ou

nt
in
g,
A
ud

it
in
g

&
A
cc
ou
nt
ab
il
it
y

Jo
ur
na
l

A
us
tr
al
ia

23
A
us
tr
al
ia
n

m
an
ag
er
s

In
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

R
ol
e
of

IR
in

th
e

in
st
it
ut
io
na
l
pr
oc
es
s

(m
ot
iv
e,
ag
en
cy
,

re
sp
on
si
bi
li
ty
,

ch
ar
ac
te
r
qu
al
it
ie
s,

em
ot
io
n,
ca
us
al

co
nn

ec
ti
on

,
pr
ov
id
en
ti
al

si
gn
ifi
ca
nc
e
an
d

ti
m
e)

T
w
o
m
ai
n
na
rr
at
iv
es

do
m
in
at
e
m
an
ag
er
s’

ex
pe
ri
en
ce
s:

IR
as

st
or
y-
te
ll
in
g

an
d
IR

as
m
ee
ti
ng

ex
pe
ct
at
io
ns

123

Integrated reporting: The current state of empirical… 305

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
14

M
ar
x
an
d
M
oh

am
m
a

da
li
-H

aj
i

Jo
ur
na
l
of

E
co
no

m
ic
s

an
d
F
in
an
ci
al

S
er
vi
ce
s

S
ou
th

A
fr
ic
a

T
op

40
co
m
pa
ni
es

on
th
e
JS
E

20
13

C
as
e
st
ud
y

IR
q
u
a
li
ty

In
de
x
(f
ul
ly

di
sc
lo
se
d
it
em

s
or

no
t)

Q
ua
li
ty

of
IR

is
ve
ry

he
te
ro
ge
ne
ou

s
S
om

e
fi
rm

s
m
er
el
y

re
na
m
ed

th
ei
r

an
nu

al
re
po

rt
as

an
IR

so
as

to
se
em

to
co
m
pl
y
w
it
h
th
e

de
ve
lo
pm

en
ts
of

IR
an
d
no

t
to

be
se
en

as
be
in
g
le
ft
be
hi
nd

F
or
m

an
d
co
nt
en
t
of

IR
st
il
l
va
ry

w
id
el
y

an
d
th
e
ne
ed

fo
r

co
m
pl
ia
nc
e
w
it
h

un
if
or
m

re
po

rt
in
g

st
an
da
rd
s
ex
is
ts

20
14

S
te
yn

S
ou

th
er
n
A
fr
ic
an

B
us
in
es
s
R
ev
ie
w

S
ou
th

A
fr
ic
a

50
C
E
O
s,
C
F
O
s
an
d

se
ni
or

ex
ec
ut
iv
es

of
JS
E
co
m
pa
ni
es

20
12

In
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

P
er
sp
ec
ti
ve
s
an
d

pe
rc
ep
ti
on

s
of

hi
gh

-l
ev
el

im
pl
em

en
te
rs
of

IR

A
dv
an
ce
m
en
t
of

co
rp
or
at
e
re
pu

ta
ti
on

ap
pe
ar
s
to

be
a
ke
y

m
ot
iv
e
fo
r

co
m
pa
ni
es

to
co
m
pi
le
an

IR
,

se
co
nd

ar
y
to

co
m
pl
ia
nc
e
as

a
pr
im

ar
y
m
ot
iv
e

123

306 P. Velte and M. Stawinoga

T
ab

le
3

co
nt
in
ue
d

O
rg
an
iz
at
io
na
l
le
ve
l

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
14

S
tu
bb

s
an
d
H
ig
gi
ns

A
cc
ou

nt
in
g,
A
ud

it
in
g

&
A
cc
ou
nt
ab
il
it
y

Jo
ur
na
l

A
us
tr
al
ia

23
C
S
R
,fi

na
nc
e
an
d

co
m
m
un

ic
at
io
ns

m
an
ag
er
s
in

15
fi
rm

s
In
te
rv
ie
w

Im
p
le
m
en
ta
ti
o
n
o
f
IR

A
na
ly
si
s
of

th
e

in
te
rn
al
m
ec
ha
ni
sm

s
an
d
pr
oc
es
se
s

em
pl
oy
ed

by
ea
rl
y

ad
op

te
rs
of

IR

W
hi
le
th
e
fi
rm

s
ar
e

ch
an
gi
ng

th
ei
r

pr
oc
es
se
s
an
d

st
ru
ct
ur
es
,o
r
at
le
as
t

ta
lk
in
g
ab
ou

t
it
,

th
ei
r
ad
op

ti
on

of
IR

ha
s
no

t
ne
ce
ss
ar
il
y

st
im

ul
at
ed

ne
w

in
no
va
ti
on

s
in

di
sc
lo
su
re

m
ec
ha
ni
sm

s

123

Integrated reporting: The current state of empirical… 307

3.4 Individual/group decision-making level

3.4.1 Behavioural decision theory

Various normative and descriptive theories seek to explain the decision-making
process. Behavioural decision theory based on the pioneering research of March and
Simon (1958) and Cyert and March (1963) takes a descriptive approach. It examines
the patterns of selection and decision making on an individual level in determining
the prerequisites of a rational decision. This includes the manner of integration of
personal values and beliefs into the decision-making process. Research in this field
notes that the decision-making process applied is primarily determined by the spe-
cific circumstances in which a decision is made and that various systems are utilized
(Sanfey 2007).

The application of behavioural decision theory to IR shows that an organization is
unlikely to consider the full range of the potential effects of their voluntary disclo-
sure. The introduction of IR is an extension of existing routines. On a practical level,
procedures are already in place which can be utilized to disclose their non-financial
information in the format of an integrated report. The decision to use IR is signifi-
cantly affected by the perceived benefit provided by IR, particularly its ability to shape
internal and external stakeholders’ perceptions of the organization.

This theoretical perspective analyses the information content and decision useful-
ness of IR as well as its form of presentation and type of transmission. In the context
of IR, behavioural decision theory explains the decision to implement IR as well as
the procedures and judgements of management in line with IR quality. Based on this
theoretical perspective, an organizational choice to implement IR is regularly based
on the socially constructed expectations of management.

3.4.2 Empirical research on stakeholder perceptions

In addition to the surveys and interviews, first experiments are used to test the appli-
cation of behavioural decision theory on individual or group decision making. The
studies typically focus on the market perceptions of IR, such as its effect on investor
behaviour. Atkins and Maroun (2015) interviewed 20 experts from the institutional
investment industry in South Africa to obtain investors’ views on IR. The experts clas-
sified the IIRC framework as an important improvement for a better understanding of
organizational sustainability. Additionally, they stressed that the integrated thinking
ethos would be undermined by the length of IR, by the repetition of other reports and by
a checkbox tool like the GRI guidelines. Rensburg and Botha (2014) conducted inter-
views with respondents from South Africa and found that very few stakeholders use
IR as their main source of financial and investment information and that these reports
are considered to be additional information. Annual and interim financial statements
continue to be the most important sources of corporate financial information. Strong
(2015) concentrates on the possibilities of a computer-mediated communication tool
to access online network sources for IR.

The first experiment in the IR context was conducted by Arnold et al. (2012), con-
centrating on investment professionals in Europe. If financial performance is good but

123

308 P. Velte and M. Stawinoga

ESG performance poor, subjects tend to obtain additional ESG information for their
valuation and adjust their value judgements to virtually the same level as subjects who
assess information provided through IR. If financial performance is poor and ESG
performance good, neither group of subjects adjusts the value judgement based on
financial data, resulting in significantly lower valuations by the subjects considering
financial statements than those considering integrated reports, even though the infor-
mation content is identical. In an experimental design with students, James (2014)
finds that IR is beneficial for investors, large companies and accounting professionals.

To date, only one experiment analyses the impact of IR assurance on investor judg-
ments. Dilla et al. (2015) include 428 nonprofessional US investors and focus on the
assurance level (limited versus reasonable) and the assurance report format (separate
or combined) as independent variables and investor judgements (reliability and credi-
bility) as the dependent variable. The authors state that the level of IR assurance does
not influence investor judgements when CSR and financial information is presented in
a combined report. CSR performance information accompanied by a combined assur-
ance report may be considered as less credible and reliable than the same information
accompanied by separate CSR and financial performance assurance reports.

A detailed list of the included studies can be found in Table 4.

3.4.3 Limitations and recommendations for future research

Research on the individual level is in the early stage so far. The discussion of the
addressees of IR (shareholder versus stakeholders) seems to be a difficult problem.
The six capitals of the IIRC framework are represented by the stakeholders, who will
assist firms in identifying concerns about the nonfinancial elements (Morros 2016).
The IR should focus on the main stakeholders and not only on the investors (see Dilla
et al. 2015). Recently, experimental research in CSR reporting is gaining increased
relevance. Hence, it can be expected that future research on the individual/group
decision-making level will increase within IR experimental settings. For example,
a simulation of the decision-making process on behalf of private investors involving
master students seems to be critical since accounting education in many countries is
still focused on financial reporting and its underlying regulations (IFRS and national
GAAP). CSR and business ethics education have had a limited impact on business
administration education so far. Thus, a wide range of business administration students
are currently not familiar with the new trend of IR.

We also see great need for empirical research activities on IR assurance. In view
of the growing importance of experimental settings in analysing the impact of CSR
assurance, the investor perceptions of IR assurance should be focused on in the future.
In this context, we have to mention that management can influence the assurance
quality through several means [type of assurance (review/audit) and type of assurer
(professional accountant, consultant, etc.)]. We also know little about the present
influence of controllers on the implementation of the integrated thinking strategy.
Hence, qualitative research designs will be necessary as the quality of IR is very
heterogeneous and the range of users is not representative for large archival studies.

123

Integrated reporting: The current state of empirical… 309

T
ab

le
4

E
m
pi
ri
ca
l
IR

st
ud

ie
s
on

th
e
in
di
vi
du

al
/g
ro
up

de
ci
si
on

-m
ak
in
g
le
ve
l

In
di
vi
du

al
/g
ro
up

de
ci
si
on

-m
ak
in
g
le
ve
ls

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

A
tk
in
s
an
d
M
ar
ou

n
M
ed
it
ar
i
A
cc
ou

nt
an
cy

R
es
ea
rc
h

S
ou
th

A
fr
ic
a

20
ex
pe
rt
s
fr
om

th
e

in
st
it
ut
io
na
l

in
ve
st
m
en
t

in
du

st
ry

20
13

In
te
rv
ie
w

S
ta
ke
h
o
ld
er

p
er
ce
p
ti
o
n
s

A
ss
es
sm

en
t
of

in
ve
st
or
s’
vi
ew

on
S
ou

th
er
n
A
fr
ic
an

IR

II
R
C
fr
am

ew
or
k
is

se
en

as
an

im
po
rt
an
t

im
pr
ov
em

en
t

M
or
e
em

ph
as
is
on

no
n-
fi
na
nc
ia
l

m
ea
su
re
s
an
d

ev
id
en
ce

of
an

ef
fo
rt

to
in
te
gr
at
e
fi
na
nc
ia
l

an
d
C
S
R
m
et
ri
cs

to
pr
ov
id
e
a
be
tt
er

un
de
rs
ta
nd

in
g
of

or
ga
ni
za
ti
on
al

su
st
ai
na
bi
li
ty

L
en
gt
h
of

IR
,

re
pe
ti
ti
on

an
d
a

ch
ec
kb

ox
to
ol

ap
pr
oa
ch

de
tr
ac
t

fr
om

th
e
us
ef
ul
ne
ss

an
d
un

de
rm

in
e
th
e

de
ve
lo
pm

en
t
of

an
in
te
gr
at
ed

th
in
ki
ng

et
ho

s

123

310 P. Velte and M. Stawinoga

T
ab

le
4

co
nt
in
ue
d

In
di
vi
du

al
/g
ro
up

de
ci
si
on

-m
ak
in
g
le
ve
ls

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

D
il
la
et
al
.

W
or
ki
ng

pa
pe
r

U
S
A

42
8
no

np
ro
fe
ss
io
na
l

in
ve
st
or
s
N
.A
.

E
xp

er
im

en
t

S
ta
ke
h
o
ld
er

p
er
ce
p
ti
o
n
s

In
fl
ue
nc
e
of

IR
as
su
ra
nc
e
le
ve
l

(l
im

it
ed

or
re
as
on
ab
le
)
an
d

as
su
ra
nc
e
re
po
rt

fo
rm

at
(s
ep
ar
at
e
or

co
m
bi
ne
d)

on
in
ve
st
or

ju
dg

em
en
ts

(r
el
ia
bi
li
ty

an
d

cr
ed
ib
il
it
y)

A
ss
ur
an
ce

le
ve
l
do
es

no
t
in
fl
ue
nc
e

in
ve
st
or

ju
dg
em

en
ts

w
he
n
su
st
ai
na
bi
li
ty

an
d
fi
na
nc
ia
l
is

pr
es
en
te
d
in

a
co
m
bi
ne
d
re
po

rt
S
us
ta
in
ab
il
it
y

pe
rf
or
m
an
ce

in
fo
rm

at
io
n

ac
co
m
pa
ni
ed

by
a

co
m
bi
ne
d
as
su
ra
nc
e

re
po

rt
m
ay

be
le
ss

cr
ed
ib
le
an
d
re
li
ab
le

th
an

th
at

ac
co
m
pa
ni
ed

by
se
pa
ra
te

su
st
ai
na
bi
li
ty

an
d

fi
na
nc
ia
l

pe
rf
or
m
an
ce

as
su
ra
nc
e
re
po
rt
s

123

Integrated reporting: The current state of empirical… 311

T
ab

le
4

co
nt
in
ue
d

In
di
vi
du

al
/g
ro
up

de
ci
si
on

-m
ak
in
g
le
ve
ls

Y
ea
r
of

pu
bl
ic
at
io
n

A
ut
ho
r(
s)

S
ou
rc
es

S
ta
te
S
am

pl
e
Y
ea
r(
s)
m
et
ho
d

R
es
ea
rc
h
qu
es
ti
on

M
ai
n
re
su
lt
s

20
15

S
tr
on

g
Jo
ur
na
l
of

C
or
po

ra
te

C
it
iz
en
sh
ip

A
us
tr
al
ia

In
te
rv
ie
w

S
ta
ke
h
o
ld
er

p
er
ce
p
ti
o
n
s

P
os
si
bi
li
ti
es

of
a

co
m
pu
te
r-
m
ed
ia
te
d

co
m
m
un

ic
at
io
n
to
ol

to
ac
ce
ss

on
li
ne

ne
tw
or
k
so
ur
ce
s
fo
r

IR

A
tt
em

pt
s
ha
ve

be
en

th
w
ar
te
d
by

un
re
so
lv
ed

di
sp
ut
es

M
at
te
r
of

pu
bl
ic

co
nc
er
n
re
la
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123

312 P. Velte and M. Stawinoga

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at
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123

Integrated reporting: The current state of empirical… 313

T
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ly

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an

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co
nt
en
t
is
id
en
ti
ca
l

123

314 P. Velte and M. Stawinoga

4 Summary

The increasing demand for IR has overtaken CSR as an integrated component of cor-
porate value creation, rather than an isolated and secondary activity (Eccles and Krzus
2015). IR typically differs from impression management and greenwashing policy as
it provides a clear link between financial and non-financial variables, and it helps to
integrate CSR and corporate governance respective management control aspects into
strategy formulation and implementation. This “integrated thinking” process, together
with the increased relevance of international accounting principles as the management
approach, can result in changes in reporting, management control and corporate gov-
ernance, promoting sound strategic decision making and the creation of sustainable
stakeholder value. Following the financial crisis of 2008/2009 and overcoming a short-
term oriented shareholder value approach, the IIRC has developed a principle-based
framework to achieve a higher relevance of IR, and it has issued a recommenda-
tion for assurance to increase its reliability. However, concerning the disclosure of
sustainability-related aspects in an integrated report, the IR concept could be partially
seen as a limited approach failing to cover stakeholder accountability (Brown and Dil-
lard 2014; Flower 2015). Thus, Brown and Dillard (2014) recommend a re-articulation
of IR that considers multiple perspectives on IR.

Our literature review of the empirical research with regard to the motivations and
possible international consequences of voluntary IR is based upon a slight modification
of the basic structure created by Cohen and Simnett (2015) concerning the market,
organizational and individual/group decision-making levels in a CSR reporting setting.
Since CSR and IR are based on fundamentally different framework concepts, CSR
studies cannot be transferred directly, although existing study designs are often used
as a template for empirical IR research.

Most of the present studies analyse the market and organizational level and focus on
the management incentives to establish IR and not only CSR reporting. In this context,
studies show that the decision to implement IR is influenced by firm characteristics
(e.g. industry, size and profitability), internal corporate governance variables (e.g.
board size and board diversity) and external corporate governance variables (e.g. legal
environment and investor base). Furthermore, archival studies found the first positive
market reactions after the implementation of IR and by increased IR quality (e.g.
firm valuation, analyst forecasts). On the other hand, IR disclosure quality is still
low and heterogeneous in an international context, although it has been increasing
recently. The organizational studies also claim that the integrated thinking process is
very costly and not yet well implemented. Management perceptions are very high,
so that IR is classified as a useful communication tool. The current empirical IR
studies on the individual/group level are focused on investor perceptions of IR. They
additionally are the first to provide incentives for conducting further research activities
as to whether investors also use IR for financial evaluation (not supported by Rensburg
and Botha 2014) and whether they react in a positive way if an assured IR is presented
in comparison to a stand-alone CSR report (not supported by Dilla et al. 2015).

Summarizing the current research on the three levels, the validity of the empirical IR
research is limited mainly with regard to the principle-based IR framework. The IIRC
framework does not prescribe specific key performance indicators, measurements or

123

Integrated reporting: The current state of empirical… 315

Table 5 Summary of the major findings concerning the market, organizational and individual/group
decision-making level of analysis

Level of analysis Major findings

Market level Implementation of IR

Decision to implement IR is influenced by firm
characteristics (e.g. size and profitability) and
external/internal corporate governance factors
(e.g. legal framework and board diversity)

IR quality

IR quality is positive affected by the quality of
overall ESG management

Market reactions

Positive market reactions after the implementation
of IR and by increased IR quality (e.g. firm
valuation, analyst forecasts)

Organizational level Implementation of IR

Intrinsic management motivation affects the
implementation of IR

IR quality

Lots of variation in the form and content of IR
exist

Individual/group decision-making level Stakeholder perceptions

IR is beneficial to investors, large companies and
accounting professionals

IR regularly be seen as an additional information
medium

The IIRC framework is seen as an important
improvement

disclosure styles and practical advice to operationalize the reporting principles (e.g.
materiality). While analysis on the market and organizational level has been growing,
research on the individual/group decision level is still not common. Nevertheless, we
expect that IR will be developed to become an established empirical research topic
due to its interdisciplinarity (e.g. accounting and finance, corporate governance, man-
agement and organization) and the increased awareness of policy makers and society.
One major problem is the current limited quality of IR in some companies, which
can be attributed to an increased risk of “greenwashing” and “labelling” to meet the
stakeholders’ expectations. Furthermore the concept of integrated thinking needs a
reorganization of management control and reporting systems. These requirements
imply that current integrated reports may be seen as a formal addition to traditional
financial reports as well as CSR reports, and that they fail to present relevant infor-
mation and integrate diverse disclosure elements. Thus, the avoidance of information
overload for the stakeholders as an important aim of IR might be not achieved yet.
A summary of the main limitations and research recommendations can be found in
Table 5.

123

316 P. Velte and M. Stawinoga

Both the implementation of voluntary IR and the assurance of an integrated report
by an external and independent party seem to represent important elements for future
stakeholder relations. Following the decision to assure IR, a company should decide
whether to engage a professional accounting firm or a non-audit company. In con-
trast to the growing empirical research on CSR assurance (see Huang and Watson
2015), only one research paper addresses IR assurance (Dilla et al. 2015). Stake-
holders demand that information provided through IR be both relevant and reliable
to support their decision-making processes. Consequently, organizations increasingly
seek to substantiate their credibility and reliability through the voluntary provision of
external, independent IR assurance (Simnett and Huggins 2015). Although the IIRC
recommends independent assurance as part of IR quality management (IIRC 2014), a
specific IR assurance standard is not available so far. The two most widely used frame-
works for nonfinancial assurance are the AA1000 Assurance Standard (AA1000AS),
launched in 2008 by AccountAbility, and the International Audit Assurance Standards
Board’s (IAASB) International Standard on Assurance Engagements (ISAE 3000). To
increase the reliability of IR assurance, the implementation of a specific international
audit standard seems to be necessary.

The empirical research is focused on worldwide samples but also on specific coun-
tries, such as South Africa or Australia. Due to EU regulations through the directive
2014/95/EU, starting with fiscal years 2017, an increase of empirical research activities
can be expected. Large PIEs with more than 500 employees have to provide a “non-
financial statement” as a regular accounting instrument. The new directive includes
voting rights for the EU member states and states that the non-financial statement may
be part of a management report, a CSR report or an integrated report. There seems to be
wide consensus within the scientific community that the relevance of IR in EU member
states will significantly increase following the transformation of the new directive into
national law, thus motivating PIEs to combine financial and non-financial reporting.

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  • Integrated reporting: The current state of empirical research, limitations and future research implications
    • Abstract
    • 1 Introduction
    • 2 IR research framework
    • 3 Review of empirical IR research
      • 3.1 Data collection
      • 3.2 Market level of analysis
        • 3.2.1 Legitimacy theory
        • 3.2.2 Archival research
        • 3.2.3 Limitations and recommendations for further research
      • 3.3 Organizational level
        • 3.3.1 Institutional theory
        • 3.3.2 Resource dependency theory
        • 3.3.3 Empirical research
        • 3.3.4 Limitations and recommendations for future research
      • 3.4 Individual/group decision-making level
        • 3.4.1 Behavioural decision theory
        • 3.4.2 Empirical research on stakeholder perceptions
        • 3.4.3 Limitations and recommendations for future research
    • 4 Summary
    • References
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