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The purpose of this article is twofold. First, it assesses in detail the extent to which corporate reporting on ethical, social and environmental issues reflects corporate performance in case study company Alpha. This “reporting‐performance” portrayal gap is a key measure of the extent to which an organisation is accountable to its stakeholders. Alpha's disclosures concerning its ethical, social and environmental performance for the years 1993 and 1999 were compared with information obtained on Alpha's performance from other sources. Two different pictures of performance emerged leading to the conclusion that, in the case of Alpha, reports do not demonstrate a high level of accountability to key stakeholder groups on ethical, social and environmental issues. Of particular concern is the lack of “completeness” of reporting. Second, the article assesses the potential of recent standards or guidelines developed by the Global Reporting Initiative (GRI) and the Institute of Social and Ethical AccountAbility (AccountAbility) as well as the industry's own “responsible care” initiative to reduce this “reporting‐performance” portrayal gap and improve corporate accountability. The conclusions point to the need for other measures to improve accountability including mandatory reporting guidelines, better developed audit guidelines, a mandatory audit requirement for MNCs and a radical overhaul of corporate governance systems.

Financial reporting decisions are influenced by environmental and individual factors. One environmental factor is the example set by management. Research has shown that the tone at the top is related to financial reporting decisions. However, this does not take into consideration that ethical cues from an employee's supervisor might also be relevant. On an individual basis, people who make unethical financial reporting decisions do not appear to be bad or evil people. So, why do these seemingly “good” people make these decisions? The theory of self-concept maintenance (Mazar et al., 2008) posits that individuals balance the desire to gain by behaving unethically with the desire to maintain a positive self-image by behaving ethically. How one balances these is based on one's ability to rationalize an action as honest, with decisions seen as having an ethical component being more difficult to rationalize. Findings indicate that having one person in a leadership position demonstrate a commitment to ethical behavior is related to more ethical financial reporting decisions, whether that person is at the top or closer to the middle. Additionally, a strong tone at the top is related to perceiving a situation is an ethical dilemma while a strong tune in the middle is not. Last, the authors find that a stronger perception that a situation is an ethical dilemma is associated with more ethical financial reporting decisions when the tune in the middle is controlled for, but not when the tone at the top is controlled for.

Prior empirical research into factors which are influential in determining the extent and nature of corporate social reporting has primarily been concerned with the impact of corporate characteristics (such as size and industry grouping) or general contextual factors (such as the social, political and economic context). Relatively little prior work has examined the internal contextual factors and their impact on reporting despite increasing emphasis in the field of practice on reporting processes and governance structures. In this study interviews were conducted with seven large multinational companies in the chemical and pharmaceutical sectors of the UK and Germany in order to identify any internal contextual factors influencing the nature and extent of reporting. The work highlights the lack of explanatory power of the existing social reporting theories. A more inclusive model of corporate social reporting is presented.

This paper aims to assess the ethical disclosure of Islamic banks (IBs) under different accounting regimes and to ascertain whether the adoption of an Islamic accounting standards (Auditing Organization for Islamic Financial Institutions [AAOIFI]) promotes the practice of ethical disclosure.

An ethical identity disclosure index was developed to serve as a benchmark to assess the level of the communicated ethical identity disclosure (CEID) of 47 IBs over 18 countries using annual reports.

The findings suggest that, overall, there is poor ethical disclosure practices and even banks that had some initiatives towards disclosures had no proper reference to benchmark for effective implementation of ethical reporting standards and had no plans for ethical and socially responsible schemes. There was no evidence to suggest that IBs that adapted the religious-based accounting regime (AAOIFI) had better levels of ethical disclosure.

Though poor practices of CEID are expected to increase reputational risks and the likelihood of loss of religious conscious customers and investors’ confidence and therefore market share and performance in the long-term, the current practice does not concur with this expectation. Furthermore, since there is no evidence to support the notion that the adoption of AAOIFI standards would support greater initiatives towards level of ethical identity disclosures, a mandatory requirement for effective disclosure through enforcement of AAOIFI’s financial reporting standards, specifically with regard to ethics and social and environmental commitment is needed.

In addition to introducing commonly accepted regulatory and supervisory guidelines and best practices that cater for the specificities of Islamic banking could significantly improve the level of CEID of IBs. In addition, the standardization of ethical (non-financial) reporting practices of IBs through guidelines and key performance indicators will facilitate CEID practices of IBs.

This paper contends that for Islamic bankers, ethics is an entrenched part of the business practice and should mitigate unethical behaviour, more so with the additional filter of Sharīʿah supervisory boards. Even if there are such practices due to ineffectiveness of Sharīʿah committees, management pressure to meet performance expectations and competitive pressures from peers in the conventional banking sector, it will not be in the interest of the banks to report them.

The purpose of this paper is to report on the long-term effect of integrated reporting on the quality of information. Investors and stakeholders rely on high-quality integrated reports to obtain social, environmental and ethical information for decision-making. A striking weakness found in recent research on integrated reports is the way certain items of social, environmental and ethical information are excluded while other items are repeated. There is accordingly much confusion, clutter and fragmentation in the integrated reporting landscape.

Through a detailed content review of the information companies report on, more insight can be gained into this question five years after the mandatory implementation of King III, which requires companies to provide integrated reports. This study used a similar approach to that of Solomon and Maroun (2012), reviewing the integrated reports of four companies with high social and environmental impact, over a period of three years (2012 to 2014).

The companies’ integrated reports were reviewed in terms of social, environmental and ethical items. The results indicate that there has been a distinct decrease in the amount of information provided in integrated reports but, more importantly, there still exists significant uncertainty as to the amount of reporting that is required.

The results of this study prove that regulators may have to provide more detailed guidelines as to the reporting duties of companies. It also indicates to managers that their approach to integrated reporting may have to be revised to ensure useful information is provided to stakeholders.

This paper aims to suggest that companies have ethical reasons to report about biodiversity issues and to investigate whether companies act on these reasons by examining the extent of biodiversity reporting in Denmark.

For the first purpose, desk research was conducted using consequentialist ethics, while for the second purpose, data were gathered from the 2009‐2011 annual reports, CSR‐type reports and homepages of 24 Danish large‐cap companies.

Philosophically, it is shown that biodiversity preservation and reporting is an ethical issue, even on the assumption that biodiversity does not possess intrinsic value. Empirically, it is shown that Danish companies score poorly overall, both quantitatively and qualitatively, with regards to reporting on biodiversity.

Even though the importance of biodiversity can be justified on different assumptions, biodiversity reporting is under‐researched offering potential for future research on a globally important issue.

Justifying the preservation of biodiversity from an instrumental viewpoint might convince accounting audiences that are sceptical of normative ethical argumentation based on intrinsic value. The relative lack of biodiversity reporting in Denmark shows the need for the State and accounting standard setters to address this issue together with business and other stakeholders.

Few studies theorize on why there is a need for environmental reporting. Those that do are based on non‐instrumental considerations. This paper gives philosophical arguments for biodiversity reporting normally outside the scope of accounting. It emphasizes how even those who deny that biodiversity has intrinsic value are morally obliged to account for biodiversity. The argument also provides novel reasons for why thinking about discount rates should be governed by pure preference considerations. Empirically, this is only the second paper examining biodiversity reporting and the first about the Danish context.

This study explores the influence individual characteristics identified in prior research have on ethical choice in a financial reporting task. An action-based, multi-metric dependent variable is developed to measure ethical reporting choice. Intermediate accounting students participate in the task as part of a curricular assignment in a revenue recognition module. Results demonstrate that several, but not all, individual characteristics found in prior research do influence accounting students’ ethical revenue recognition choices. Specifically, the external locus-of-control, idealism, consequentialist, and Machiavellian characteristics are found to influence ethical reporting choice.

There has been a call for additional managerial accounting research that examines the effect of non-pecuniary preferences (such as those for honesty and fairness) on managerial reporting decisions.

Drawing from trait theory, agency theory, and psychological contracts theory, Kidder (2005) suggests that personality traits and perceived unfairness in the workplace both help predict detrimental workplace behaviors, with perceived fairness affecting the honesty in reporting of some individuals but not others. We test Kidder’s (2005) theory in an experimental setting where participants have opportunity and incentive to report dishonestly.

Participants’ honesty preferences and ethical values (idealism and relativism) were measured, and the fairness of the participants’ employment contracts was manipulated. As predicted, higher preferences for honesty are significantly associated with honesty in reporting, suggesting that participants make trade-offs between increasing their own wealth and acting honestly. Additionally, the perceived fairness of compensation interacted with honesty preferences and relativism to affect honesty in reporting.

The implication for practice is that while a small number of employees are likely to consistently behave in honest or self-interested ways, firms may be able to positively influence the behavior of the majority of employees by enacting policies and procedures that contribute to perceptions that compensation is fair.

These findings contribute to our understanding of non-pecuniary preferences on managerial reporting decisions.

The purpose of this paper is to establish the relationship between corporate governance, ethical culture, Internal Controls over Financial Reporting (ICFR) and compliance with International Financial Reporting Standards (IFRS) by microfinance institutions (MFIs).

This is a cross-sectional survey based on a sample of 85 MFIs in Uganda. Hypotheses were tested using partial least squares (PLS) analysis technique. An unweighed IFRS compliance index to capture the level of compliance with IFRS was constructed. Yet to capture corporate governance, ethical culture and ICFR variables, the perceptions of top management of MFIs have been taken into consideration.

Corporate governance, ethical culture and ICFR, each makes a significant contribution to compliance with IFRS. Also both corporate governance and ethical culture are significantly associated with ICFR. However, compliance with IFRS by MFIs is better enhanced by corporate governance and ethical culture through ICFR.

Results support the idea that in terms of agency and virtue ethics theories, the board should support ICFR to minimize egocentric managers and other employees and also inculcate an ethical culture to achieve better compliance with IFRS because corporate governance and ethical culture are associated with sound ICFR which in turn lead to compliance with IFRS.

Boards of MFIs should encourage investments that improve ICFR. At the same time, regulators should ensure that boards are composed of members with financial expertise, with no conflict of interest and introduce mechanisms that encourage boards to perform their roles.

The study contributes towards a methodological position by showing that the behavioural perspective of corporate governance can be an alternative to the boards’ structural variables in investigating compliance with IFRS. A direct association of ethical culture and compliance with IFRS and an indirect association through ICFR can be envisaged.

This paper aims to examine the extent of ethical values information disclosure on the top 100 Malaysian and Indonesian companies’ annual reports using coercive isomorphism under the institutional theory.

Using the content analysis, the presence or exclusion of ethical values information disclosed on 100 Malaysian and Indonesian companies’ annual reports using a newly developed Ethical Values Disclosure Index is carried out.

The results of the analysis found that Indonesian companies on average disclosed 31 items under study compared to 27 items disclosed by the companies in Malaysia. The results suggest that Indonesian companies are more vigilant in the code of ethics, companies policy on ethical issues, monitoring program and accountability, ethical performance, ethical infrastructure and organizational responsibility aspects, whereas their Malaysian counterparts are better in reporting governance and integrity committee or board of directors.

The findings may not be applicable to other countries in the same region, nevertheless, revealed the importance of adequate ethical values disclosure in determining the level of ethical behavior.

Companies in Indonesia are coercively pressed by various influential stakeholder groups to address ethical issues. The less disclosure regarding corporate ethical behavior may indicate that unethical practices continue to be a problem in the Malaysian corporate sector.

This paper adds to the literature by examining the elements of ethical values adapted mainly from the professional bodies that regulate the accounting profession and other organizations using the institutional theory, particularly in two countries.