Is integrated reporting more value relevant in North America?

Haiyan Zhou and Stephen Owusu-Ansah

Asian Review of Accounting, 2025, vol. 34, issue 5, 1023-1050

Abstract: PurposeThis study investigates the value relevance of integrated reporting in the North American equity markets.Design/methodology/approachUsing a sample of firms in the US and Canada, we compare a treatment group that has adopted integrated reporting with a control group that has not to examine the value relevance of key accounting variables based on models derived from Ohlson’s (1995) residual income valuation framework.FindingsWe find that investors assign greater value to information presented in integrated reports than traditional, separate financial and nonfinancial disclosures. Furthermore, the value relevance of financial information is significantly higher for firms that have adopted integrated reporting than for those that have not.Practical implicationsOur evidence supports signaling theory, suggesting that compliance with the International Integrated Reporting Council’s initiative to consolidate diverse disclosures into one comprehensive report enhances the value relevance of information for investors.Social implicationsThese findings have implications for policymakers, corporate managers and investors. As integrated reporting becomes a mainstream financial reporting practice, corporations are likely to become more conscious of the environmental and social impacts of their operations and increasingly incorporate sustainability considerations into their strategic decision-making.Originality/valueThis study is one of the first attempts to examine the value relevance of integrated reporting in the North American equity markets.

Keywords: Integrated reporting; Value relevance; Sustainability; Signaling theory (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-09-2024-0276

DOI: 10.1108/ARA-09-2024-0276

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