The Paradigm Shift from Financial Reporting to Integrated Reporting

Abstract

In Japan, many companies are preparing integrated reports. Under such circumstances, some companies prepare annual reports as an integrated report. Nevertheless, the views on the essence of the integrated report are not always agreed upon. Some companies are preparing annual reports or sustainability reports as integrated reports. Thus, some researchers insist on the integrated report as being useful for investors. On the other hand, some researchers proposed that the integrated report is useful for stakeholders. This paper discusses the essence of integrated reports and who they might be useful for. The aim of this paper is to propose our opinion about the essence of integrated reports. This paper clarifies some views on the integrated reports and used a literature review methodology to propose our view. As a result of the literature research, it was found that the essence of the integrated report is to disclose not only financial information but also non-financial information. This point is a significant difference from the annual report. In addition, the integrated report is not disclosed only to investors, but was found to be strongly influenced by the idea of the sustainability report in terms of stakeholder engagement. In short, what this paper wanted to point out is that integrated reporting can be used not only as information disclosure to stakeholders but also as information usage for strategy formulation and business management through stakeholder engagement. Keywords: