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The trend of integrated reporting practice in South Africa: ceremonial or substantive?

Abdifatah Ahmed Haji (Department of Accounting, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Mutalib Anifowose (Department of Accounting, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 3 May 2016

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Abstract

Purpose

The purpose of this paper is to examine the trend of integrated reporting (IR) practice following the introduction of an “apply or explain” IR requirement in South Africa. In particular, the authors examine whether the IR practice is ceremonial or substantive in the context of a soft regulatory environment.

Design/methodology/approach

By way of content analyses, the authors examine the extent and quality of IR practice using an IR checklist developed based on normative understanding of existing IR guidelines. The evidence is drawn from 246 integrated reports of large South African companies over a three-year period (2011-2013), following the introduction of IR requirement in South Africa.

Findings

The results show a significant increase in the extent and quality of IR practice. The findings also reveal significant improvements in individual IR categories such as connectivity of information, materiality determination process and reliability and completeness of the integrated reports. However, despite the increasing trend and evidence of both symbolic and substantive IR practice, the authors conclude that the current IR practice is largely ceremonial in nature, produced to acquire organisational legitimacy.

Practical implications

For academics, the authors argue that there is a need to move away from the “what” and “why” aspects of the IR agenda to “how” IR should work inside organisations. In particular, academics should engage with firms through interventionist research to help firms implement integrated thinking and substantive reporting practices. For organisations, the findings draw attention to specific aspects of IR that require improvement. For policymakers, the study provides evidence based on the developmental stage of IR practice and draws attention to certain areas that need clarification. In particular, the International Integrated Reporting Council and Integrated Reporting Committee of South Africa should provide detailed guidelines on connectivity of information, material issues and disclosure of multiple capitals and their trade-offs. Finally, for educators, in line with the ACCA’s embedment of IR in its accounting courses, there is a need to incorporate IR in the curriculum; in particular, the authors argue that the best way to advance IR is in a “ubiquitous” spread in accounting and management courses.

Originality/value

This study provides empirical account of IR practice over time in the context of a regulatory IR environment. The construction of an IR checklist developed based on normative understanding of local and international IR guidelines is another novel approach of this study.

Keywords

Acknowledgements

The paper has benefited from multiple reviews from several anonymous reviewers of this journal. The authors are sincerely grateful to the many insightful comments of the reviewers in the development of this paper. The authors are also very grateful to the editor, Professor Carol Adams, for her continuous follow up and encouragement throughout the review process. All remaining errors are a result of the authors’ own work.

Citation

Ahmed Haji, A. and Anifowose, M. (2016), "The trend of integrated reporting practice in South Africa: ceremonial or substantive?", Sustainability Accounting, Management and Policy Journal, Vol. 7 No. 2, pp. 190-224. https://doi.org/10.1108/SAMPJ-11-2015-0106

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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