The Integrated Reporting (IR) Framework of 2013 represents the latest international attempt to connect a firm’s financial and sustainability (i.e., environmental, social and governance) performance in one company report. An IR should communicate “concisely” about how a firm’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of sustainable value. At the same time, an IR needs to be “complete and balanced”, i.e., broadly including all material matters, both positive and negative, in a balanced way. Drawing on impression management studies, we examine a selection of performance determinants to gain insights into the factors associated with conciseness, completeness and balance in IR. The results from a sample of IR early adopters show that in the presence of a firm’s weak financial performance, the IR tends to be significantly longer and less readable (i.e., less concise), and more optimistic (i.e., balanced). We additionally find that firms with worse social performance provide reports that are foggier (i.e., less concise) and with less information on their sustainability performance (i.e., are less complete). Our evidence implies that IR early adopters employ quantity and syntactical reading ease manipulation as well as thematic content and verbal tone manipulation as impression management strategies. The results also suggest that such strategies depend not only on the level of firms’ performance but also on the type of performance (financial versus nonfinancial/sustainability). This paper adds to the limited literature on IR in sustainability accounting as well as to the research in mainstream financial accounting that examines disclosure quality using textual analysis.

Saying more with less? Disclosure conciseness, completeness and balance in Integrated Reports

MELLONI, GAIA;CAGLIO, ARIELA;
2017

Abstract

The Integrated Reporting (IR) Framework of 2013 represents the latest international attempt to connect a firm’s financial and sustainability (i.e., environmental, social and governance) performance in one company report. An IR should communicate “concisely” about how a firm’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of sustainable value. At the same time, an IR needs to be “complete and balanced”, i.e., broadly including all material matters, both positive and negative, in a balanced way. Drawing on impression management studies, we examine a selection of performance determinants to gain insights into the factors associated with conciseness, completeness and balance in IR. The results from a sample of IR early adopters show that in the presence of a firm’s weak financial performance, the IR tends to be significantly longer and less readable (i.e., less concise), and more optimistic (i.e., balanced). We additionally find that firms with worse social performance provide reports that are foggier (i.e., less concise) and with less information on their sustainability performance (i.e., are less complete). Our evidence implies that IR early adopters employ quantity and syntactical reading ease manipulation as well as thematic content and verbal tone manipulation as impression management strategies. The results also suggest that such strategies depend not only on the level of firms’ performance but also on the type of performance (financial versus nonfinancial/sustainability). This paper adds to the limited literature on IR in sustainability accounting as well as to the research in mainstream financial accounting that examines disclosure quality using textual analysis.
2017
2017
Melloni, Gaia; Caglio, Ariela; Perego, Paolo
File in questo prodotto:
File Dimensione Formato  
JAPP_acceptance_letter_dec_2016.pdf

non disponibili

Tipologia: Allegato per valutazione Bocconi (Attachment for Bocconi evaluation)
Licenza: NON PUBBLICO - Accesso privato/ristretto
Dimensione 210.22 kB
Formato Adobe PDF
210.22 kB Adobe PDF   Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3995798
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 204
  • ???jsp.display-item.citation.isi??? 181
social impact