Informational Content and Assurance of Textual Disclosures: Evidence on Integrated Reporting

Ariela Caglio, Gaia Melloni and Paolo Perego

European Accounting Review, 2020, vol. 29, issue 1, 55-83

Abstract: This paper examines the economic benefits associated with textual attributes and the external assurance of integrated reporting (IR), an innovative form of corporate disclosure that connects financial and environmental, social and governance (ESG) information in a single report. We investigate the setting of South Africa, where IR has been mandatory since 2010 for listed companies. We find that IR readability is associated with a higher market valuation, conciseness with higher stock liquidity and tone bias with less dispersed analysts’ estimates. Results suggest that market participants appreciate IRs that are readable, short and focused, as well as hint at tone management strategies targeting analysts. We also show that assurance on IR moderates the negative effects of poor textual attributes: if firms publish IRs that are difficult to read but assure them, this compensates for the negative influence of reading difficulty on a market value; if long IRs are assured, this dampens the negative effect of verbosity on liquidity; if firms assure IRs, analysts’ forecast dispersion is lower, therefore suggesting that assurance acts as a credibility-enhancing mechanism for external users. Finally, we show that textual attributes and assurance matter for broader audiences interested in the ESG dimensions of a firm’s performance.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://hdl.handle.net/10.1080/09638180.2019.1677486 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:euract:v:29:y:2020:i:1:p:55-83

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REAR20

DOI: 10.1080/09638180.2019.1677486

Access Statistics for this article

European Accounting Review is currently edited by Laurence van Lent

More articles in European Accounting Review from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().