Integrated reporting as a determinant of changing the targets of economic analysis of sustainable development in the face of challenges

Subject. The article deals with the revision of targets in the economic analysis, enabling timely identification of factors of value creation, and considering the influence of the interests of stakeholders. Objectives. The purpose is to identify targets of economic analysis in connection with changes in information requests of stakeholders and requirements for corporate reporting, concerning the disclosure of opportunities for sustainable development in the context of challenges. Methods. We performed a content analysis of changes in information requests of stakeholders and requirements for the composition and content of types of corporate reporting. The study employs methods of systems, comparative, structural, and logical analysis. Results. The demonstration of excellence by management and investors in understanding the values and the best ways to achieve goals creates threats, and, by definition, is a challenge that should be reflected in integrated reporting. The system of indicators and methods of analysis should be aimed at identifying conflicts and take into account the interests of stakeholders, which will ensure the balance of resources used in creating value. Conclusions. The determinant of the development of corporate reporting is integration, in which a significant amount of information should contain estimated parameters of economic, social and environmental problems and threats specific to major challenges. It will ensure the most effective interaction of stakeholders in managing corporate risks associated with all types of capital. Such disclosure will lead to a synergistic effect in making strategic decisions on sustainable development.

“It’s a long story…” – impression management in South African corporate reporting

Purpose The purpose of this paper is to investigate whether companies listed on the Johannesburg Stock Exchange use impression management techniques to obscure financial performance across the corporate reporting suite. Design/methodology/approach Mixed-effect linear regression models were used to examine whether there is a relationship between the financial performance of a company and the length or complexity of the reports produced. Findings Consistent with trends examined internationally, companies with lower financial performance tend to present lengthier disclosures throughout the reporting complement. However, there is limited evidence to suggest a definitive relationship between report complexity and performance. Corporate reports have maintained a consistent level of complexity and are not easily readable. Social implications This paper is unique as it simultaneously considers multiple corporate reports, including the annual financial statements, integrated reports and market announcements. The paper contributes to the limited body of literature on impression management from emerging economies. Originality/value A comparison of the complexity measures to the average education level of South Africans indicates that most corporate reports are not readable to the layman investor. Thus, despite there being no definitive relationship between complexity and performance, there is impetus to simplify corporate reporting.

Determining the content of corporate reporting on human rights

Business enterprises have to report their activities to stakeholders in order to provide corporate transparency. Non-financial corporate reports provide a comprehensive coverage of environmental, socio-economic, labor, health, and human rights issues. In the paper the author argues that a uniform definition of a sector-specific human rights issue in reporting frameworks, rather than self-identification by enterprises of salient human rights issues, would help to achieve standardization and thus the possibility of sanctions in the event of false or misleading reporting. The author analyzes existing international and regional non-financial reporting instruments regarding the human rights included in it. The main content issues of non-financial reporting are derived and given requirements to improve them. The author further analyzes whether the two main frameworks for human rights reporting (the GRI Standards and the UNGPs Reporting Framework) currently meet the requirements for content defined in the paper and, if not, how they can be changed.

Effects of the COVID-19 pandemic on disclosures in passenger airlines’ financial statements

This article analyses the impact of COVID-19 on the disclosures of 24 financial statements of passenger airline companies in Europe (including United Kingdom), North America, China (including Hong Kong), Middle East and South America for financial year 2020. This impact is significant in our research sample as evidenced by a total revenue decrease of 60% compared to previous year. We have examined for specific areas whether the airline companies contribute to transparent reporting and useful information to existing and potential investors, regulators, supportive government bodies and other stakeholders following the COVID-19 pandemic. The areas of our research focus on going concern, rent concessions, significant judgements and estimates, impairments, governmental support and the auditor’s report. Our study shows diversity in the extent of transparency in both financial statements and auditor’s opinions. Good financial practices are included and discussed in this study to further stimulate transparency in corporate reporting.

Double materiality and the shift from non-financial to European sustainability reporting: review, outlook and implications

PurposeThis paper outlines the development of the principle of materiality in the European accounting framework, from the Modernization Directive (2003/51/EC) to the NFI Directive (2014/95/EU) and on to the proposals for a Corporate Sustainability Reporting (CSR) Directive (2021/0104 (COD)). The authors highlight how the requirements for corporate reporting in terms of sustainability matters have changed, underlining the main issues that require further attention by practitioners, researchers and legislators.Design/methodology/approachThis paper is based upon a historic analysis of European Union (EU) regulations in the field of non-financial and sustainability reporting and how these have changed over time. A conceptual comparison of different reporting concepts is presented, and changes in their relevance to the EU accounting framework are discussed as part of the historic analysis. Implications from corporate practice are derived from previous empirical findings from the EU Commission's consultations.FindingsThe proposed change from non-financial to sustainability reporting within the EU affects more than simply the terminology used. It implies that a different understanding is needed of both the purposes of company reporting on sustainability matters and the aims of carrying out such reporting. This change was driven by the need and desire to appropriately interpret the principle of materiality set forth in the NFI Directive. However, the recent redefinition in the shift within the EU Commission's proposals presents considerable challenges–and costs–in practice.Research limitations/implicationsFuture research on the conceptualization and operationalization of ecological and social materiality, as well as on the use of this information by different stakeholder groups, is necessary in order to (a) help companies that are applying the reporting requirements in practice, (b) support the increased harmonization of the reports published by these companies and (c) fully assess the costs and benefits associated with the increase in reporting requirements for these companies.Practical implicationsCompanies have to establish relevant reporting processes, systems and formats to fulfil the increasing number of reporting requirements.Originality/valueThis paper outlines the historic development of the principle of materiality regarding mandatory non-financial or sustainability reporting within the EU. It outlines a shift in rationales and political priorities as well as in implications for European companies that need to fulfil the reporting requirements. In consequence, it describes appropriate interpretations of this principle of materiality under current and upcoming legislation, enabling users to apply this principle more effectively.

The Impact of the Quality of Integrated Reporting Disclosure on Corporate Reputation

In 2013, the International Integrated Reporting Council (IIRC) issued the Integrated Reporting (IR) Framework to improve corporate reporting. The purpose of IR is to integrate financial and non-financial information to explain how the organisation creates value and improves firm performance over time. Since the introduction of IR, a company weighs the benefits over the costs of changing to IR. Recent trends in IR have heightened the need to examine the actual contents of IR. The objective of this study was to find the relationship between preparing a high-quality IR and corporate reputation. Corporate reputation is one of the main objectives for the preparation of IR, and preparing a high-quality IR can positively impact corporate reputation. Data was collected from a sample of 120 companies from the IIRC websites for three years (360 firm-year observations) to examine the quality of following the 2013 Framework. An index was developed, and the corporate reputation score was collected from the RepTrak websites. The finding showed that companies preparing high-quality IR reports had a significant positive relationship with corporate reputation. Preparing a high-quality IR sends a signal to users of annual reports as a connotation of the company (good product or services, ethical management reporting), which will help build trust towards the company and improve its reputation. This study contributes by providing empirical evidence for a company, which is uncertain about the benefits of IR. The IR disclosure score can be used as a reference by IIRC and policymakers to prepare the IR. Keywords: integrated reporting, disclosure quality, corporate reputation

Properly identified imaginary needs, an inaccurately proposed methodology: The case of Rochester school of accountancy’s positive accounting methodology

Research Question: Whether accounting research has been in a better status after the domination of Rochester School of Accountancy’s Positive Accounting Methodology. Motivation: This study revisits the debate of the validity of Rochester school of accountancy's positive methodology. Rochester school of accountancy's positive accounting research has properly identified the assumed imaginary need of the US market. While positive accounting methodology may not be scientific under various accounts for science, it has contributed to accounting methodologically. Idea: Restricting financial accounting on issues related to decision-usefulness and perceiving corporate reporting as a product of accounting choices from an agency theory perspective constrains other dimensions of reality. Any restrictions to definitions of the role of accounting and its function (Glauter & Underdowen, 1974) blocks profoundly deep-rooted in contextual factors such as a country's social, political, and economic environment that all make up accounting which supposedly needs to be considered (Hellmann et al., 2010) in properly theorizing comprehensively practiced accounting. Data: Extensive writings have that documented internationally throughout time have been looked over. Tools: An analytical and critical examination has been conducted upon internationally accounting literature in a wide-ranging manner to provide an evaluation regarding Rochester school of accountancy's positive accounting research. Findings: The positive accounting methodology of the Rochester school of accountancy has been criticized by several accounting researchers for decades and even deem it disappointment and probably shame. Yet, Watts and Zimmerman declared themselves prime candidates. Its prevalence is the rhetoric of scientific inquiry. A measure of the failure of the so-called positive accounting methodology has achieved lays in its inability to become universal because differences in institutional environments persevere in the world. Contribution: Revisiting the debate of the validity of Rochester school of accountancy's positive methodology potentially contributes to our knowledge in assessing its legitimate prevalence in academic accounting research. New accounting researchers and scholars need to be aware of the predominant theoretical structure that governs the empirical financial paradigm and its limitation. This is especially significant to accounting researcher who has been intellectually trained under the positivistic tradition of economics.

Information System for Corporate Performance Assessment and Reporting

There are discussed current trends of corporate performance assessment (measurement of economic/financial, environmental, social and governance key performance indicators) and corporate reporting in this paper. In corporate performance assessment we focus particularly on food and agricultural sector. The core of the paper is the proposal of the prototype of information system for small and medium enterprises, which would enable various enterprises to introduce sustainable reporting. We propose a relational data model with several abstract entities to represent various differences in various reporting frameworks. Our goal is to design a generic information system which may be used by small and medium enterprises to start with their corporate performance assessment and reporting. The overall structure of the information system is described in the paper, along with the core data model and possible extensions into XBRL based reporting and business intelligence.