Exploring the firm and country determinants of the voluntary adoption of integrated reporting

Abstract

Information used to manage the business and support the decision-making of stakeholders is being subject to an evolution. In this context, traditional financial reporting is considered not sufficient anymore. This has translated into a sharp increase in the number of firms that have begun to adopt emerging reporting practices. This study aims to examine the influence that both firm- and country-specific characteristics have on the voluntary uptaking of integrated reporting internationally. In order to do so, it analyses a sample of 71 international listed companies that have adopted this reporting form in 2016. The results show that firms are more likely to implement integrated reporting if they are located in countries with a higher level of corruption perception and a better risk rating and that are considered as relatively more collectivist and feminist and with a long-term orientation. Legal system has resulted to be not significant. As for firms' characteristics, large size, profitability, market-to-book ratio, and the size of the board are found to be significant variables. Moreover, the results indicate that the adoption of integrated reporting is not influenced by a higher level of leverage, firm efficiency and board diversity and independence.