The implication of corporate reporting practices on the quality of integrated reports: a study of companies listed on the Johannesburg Stock Exchange

Abstract

The value relevance of integrated reporting is an ongoing debate. On the one hand, reporting entities may take a value relevant substantive approach to integrated reporting and report on actual organisational reforms and results. While on the other, a symbolic approach to integrated reporting can be adopted where the report is used to create the illusion of corporate responsibility. The objective of this paper is to determine if the adoption of three reporting practices, namely: 1) the use stand-alone CSR reports; 2) reporting framework adoption and 3) CSR assurance, are associated with a substantive or symbolic approach to integrated reporting. The investigation was performed by first measuring IR quality and then performing a Spearman’s rho to determine the significance of the relationship between the variables. IR quality was disaggregated into quality surrogates and individually captured. The dimensions of quality identified were: how much information was disclosed (quantity); the relative proportion of CSR information (density); the type of information (measurement); the “spirit” of the information (value relevance) and the user ease of use (acceptability). The results suggest that the only substantive practice is the use of a stand-alone CSR report. There was limited evidence supporting the fact that this practice is associated with a higher quality report. Both the adoption of reporting frameworks and CSR assurance had no significant associations with IR quality and its surrogates. In conclusion, the evidence suggests adopting a framework and CSR assurance are in line with obfuscation and legitimacy theory. Providing a separate CSR report appears to be a substantive practice that is associated with an IR with enhanced quality.