Does Integrated Report Quality Matter for Supplier Financing?

Abstract

This study examines the relationship between integrated report quality (IRQ) and supplier financing using 603 firm-year observations from firms listed on the Johannesburg Stock Exchange (JSE) between 2011 and 2021. We find that IRQ has a positive association with supplier financing, indicating that firms with higher IRQ are more likely to attract increased supplier finance. This positive IRQ-supplier financing relationship is further intensified by lower information asymmetry, implying that firms’ information environment plays a pivotal role. Mediation analysis indicates that information asymmetry and creditworthiness serve as underlying channels through which IRQ affects supplier financing. The IRQ-supplier financing interaction is also found to increase firms’ value. The study’s findings are crucial for stakeholders, such as report preparers, regulators, policymakers, the IIRC, IASB, ISSB, and JSE. These findings highlight IRQ’s importance in enhancing supplier finance and indicate further steps to enhance IRQ for fostering financial stability and sustainable development worldwide.