Carlo Marcon

Institutional Determinants of IR Disclosure Quality

The aim of this chapter is to study whether and how the institutional context where a company operates influences Integrated Reporting (IR) disclosure quality, as measured through a unique hand-collected dataset. Our results show strong empirical support for the hypothesis that a country’s institutional characteristics significantly shape IR disclosure quality. In particular, we find that disclosure quality is higher in civil law countries and in countries with higher employee protection, levels of market coordination, ownership concentration, education, density of trade unions, corporate social responsibility and economic development. Conversely, the higher the investor protection, the lower the IR disclosure quality. These results allow us to draw new insights on the nature of IR and its relationship with institutional contexts.

Empirical Evidence on Current Integrated Reporting Practices

Due to the emerging nature of Integrated Reporting, little is known about how companies are preparing their reports. In order to reduce this gap of knowledge, the chapter aims at analyzing the content and quality of the 2013 and 2009 integrated annual reports of the companies engaging in the Pilot Program Business Network of the International Integrated Reporting Council (IIRC) in order to assess the degree of compliance with the IIRC Framework in 2013 and the evolution of IR disclosure quality from 2009 to 2013. The research findings highlight a certain resistance from the companies to adhere to the spirit of IR, although the judgment of overall compliance should be considered positive both in absolute terms, as well as compared to the 2009 results.