Does Corporate Governance Affect the Quality of Integrated Reporting?

Thilini Cooray, A. D. Nuwan Gunarathne and Samanthi Senaratne
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Thilini Cooray: Department of Accounting, University of Sri Jayewardenepura, Nugegoda 10250, Sri Lanka
A. D. Nuwan Gunarathne: Department of Accounting, University of Sri Jayewardenepura, Nugegoda 10250, Sri Lanka
Samanthi Senaratne: Department of Accounting, University of Sri Jayewardenepura, Nugegoda 10250, Sri Lanka

Sustainability, 2020, vol. 12, issue 10, 1-30

Abstract: This study examines how governance mechanisms affect the quality of integrated reporting (IR), which is fast emerging both as a tool to help firms understand their value creation process and to communicate effectively with external stakeholders. This study first developed an index to assess the quality of integrated reports. Subsequently, 132 integrated reports of Sri Lankan public listed companies selected over a three-year period were content analysed. The hypotheses formulated on the relationship between corporate governance and the quality of IR based on the agency theory were analysed using multivariate linear regression and panel regression. The results show that there is limited support from the corporate governance system for providing quality information to stakeholders on the value creation process through IR, except for board size and the availability of a separate risk management committee. This is the result of the heavy emphasis of corporate governance requirements and the resulting mechanisms of Sri Lankan companies on mandatory corporate reporting requirements compared to a voluntary reporting model such as IR. Since many corporate governance aspects are meant to fulfill mandatory reporting requirements, the results imply that the directors have given limited attention to providing quality information through voluntary disclosure practices such as IR, although they use resources to prepare integrated reports.

Keywords: corporate governance; integrated reporting quality; agency theory; non-financial disclosure; Sri Lanka; value creation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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