The recent European Union Directive 95/2014 enforced a radical shift from voluntary to mandatory disclosure of non-financial information. Given radical changes in reporting practices, there is an urgent need to assess the firms’ attitude to disclose non-financial information regarding the new requirement. This paper aims to investigate whether the quantity and quality of non-financial information, voluntarily disclosed in the years before the directive came into force, were linked to the level of compliance.
Selecting a sample of 60 Italian companies from the obliged entities, the authors carried out a manual content analysis on corporate reports and developed some research hypotheses to explore if their sustainability practices can affect non-financial disclosures required by the Italian adoption of the European directive (i.e. Legislative Decree 254/2016).
Evidence showed that prior skills and competencies in non-financial reporting made a significant contribution especially regarding to the presence of business model, but further efforts are expected to improve the quality of non-financial reports.
This study yields an initial assessment of the implementation of the European directive in Italy. It may, therefore, help policymakers to identify ways to improve the harmonization of reporting practices. Preparers can also be supported in choosing different positioning of reporting on non-financial information.
This research provides interesting insights into the ex ante and ex post adoption of the European directive by investigating how Italian companies are reacting to regulatory and institutional requirements. One of the main problems remains the lack of a shared understanding of the term “non-financial”, which can make the communication process difficult and unclear.
The authors sincerely appreciate the time and useful comments given by anonymous reviewers. A special thank furthermore goes both to the Associate Editor, Prof. Warren Maroun, and the Editor – in-Chief, Prof. Charl de Villiers, for their invaluable support during the review process.
An earlier version of this study was presented at the SIDREA National Conference, “The new boundaries of financial reporting”, University of Verona, Italy, 13-14th September 2018, and the 14th EIASM Interdisciplinary Conference on Intangibles and Intellectual Capital. Value Creation, Integrated Reporting and Governance, Munich, Germany, 20-21th September 2018. The authors would like to thank the Chairpersons and all participants for their useful suggestions.
Doni, F., Bianchi Martini, S., Corvino, A. and Mazzoni, M. (2019), "Voluntary versus mandatory non-financial disclosure: EU Directive 95/2014 and sustainability reporting practices based on empirical evidence from Italy", Meditari Accountancy Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MEDAR-12-2018-0423Download as .RIS
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