The non-financial reporting practices of Hungarian listed public interest entities considering the 2014/95/EU Directive

Abstract

Purpose: This paper aims to investigate the non-financial reporting (NFR) practices of Hungarian listed public interest entities for 2016–2018 in terms of the required disclosure content based on the 2014/95/EU Directive (ED). Design/methodology/approach: The authors apply content analysis methodology on Hungarian firms subject to mandatory reporting under the ED. The target variable in the multivariate model is the reporting quality (Qi) measured by a combined index. Findings: The authors find that the ED had a moderate impact on Hungary's reporting quality because the overall disclosure of the sample only increased from low to medium level. The authors found that the value of intangible assets is a determinant of the reporting quality before and after the implementation of the ED. The findings support the effect of coercive isomorphism on Hungarian NFR practices. Research limitations/implications: The limitation of the research is the number of firms examined. However, the authors covered the entire (non-bank) community of the Hungarian firms subject to the ED. Practical implications: The authors suggest that reporting entities build upon the synergy between intellectual capital disclosure and NFR when elaborating their reporting strategies. The authors recommend the integration of ethical matters into corporate strategies and policies. Policymakers may consider the revision of the Hungarian regulations. The authors suggest academics embrace these topics in teaching. Originality/value: To the best of the authors’ knowledge, this is the first study that investigates the impact of ED in the context of Hungary. The authors contribute to the existing literature by adding the results of the ridge regression model, highlighting the importance of intangible assets.