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Article
Publication date: 10 August 2020

Matteo La Torre, Svetlana Sabelfeld, Marita Blomkvist and John Dumay

This paper introduces the special issue “Rebuilding trust: Sustainability and non-financial reporting, and the European Union regulation”. Inspired by the studies…

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1028

Abstract

Purpose

This paper introduces the special issue “Rebuilding trust: Sustainability and non-financial reporting, and the European Union regulation”. Inspired by the studies published in the special issue, this study aims to examine the concept of accountability within the context of the European Union (EU) Directive on non-financial disclosure (hereafter the EU Directive) to offer a critique and a novel perspective for future research into mandatory non-financial reporting (NFR) and to advance future practice and policy.

Design/methodology/approach

The authors review the papers published in this special issue and other contemporary studies on the topic of NFR and the EU Directive.

Findings

Accountability is a fundamental concept for building trust in the corporate reporting context and emerges as a common topic linking contemporary studies on the EU Directive. While the EU Directive acknowledges the role of accountability in the reporting practice, this study argues that regulation and practice on NFR needs to move away from an accounting-based conception of accountability to promote accountability-based accounting practices (Dillard and Vinnari, 2019). By analysing the links between trust, accountability and accounting and reporting, the authors claim the need to examine and rethink the inscription of interests into non-financial information (NFI) and its materiality. Hence, this study encourages research and practice to broaden mandatory NFR practice over the traditional boundaries of accountability, reporting and formal accounting systems.

Research limitations/implications

Considering the challenges posed by the COVID-19 crisis, this study calls for further research to investigate the dialogical accountability underpinning NFR in practice to avoid the trap of focusing on accounting changes regardless of accountability. The authors advocate that what is needed is more timely NFI that develops a dialogue between companies, investors, national regulators, the EU and civil society, not more untimely standalone reporting that has most likely lost its relevance and materiality by the time it is issued to users.

Originality/value

By highlighting accountability issues in the context of mandatory NFR and its linkages with trust, this study lays out a case for moving the focus of research and practice from accounting-based regulations towards accountability-driven accounting change.

Details

Meditari Accountancy Research, vol. 28 no. 5
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 8 August 2018

Matteo La Torre, Vida L. Botes, John Dumay, Michele Antonio Rea and Elza Odendaal

As Big Data is creating new underpinnings for organisations’ intellectual capital (IC) and knowledge management, this paper aims to analyse the implications of Big Data…

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1799

Abstract

Purpose

As Big Data is creating new underpinnings for organisations’ intellectual capital (IC) and knowledge management, this paper aims to analyse the implications of Big Data for IC accounting to provide new conceptual and practical insights about the future of IC accounting.

Design/methodology/approach

Based on a conceptual framework informed by decision science theory, the authors explain the factors supporting Big Data’s value and review the academic literature and practical evidence to analyse the implications of Big Data for IC accounting.

Findings

In reflecting on Big Data’s ability to supply a new value for IC and its implications for IC accounting, the authors conclude that Big Data represents a new IC asset, and this represents a rationale for a renewed wave of interest in IC accounting. IC accounting can contribute to understand the determinants of Big Data’s value, such as data quality, security and privacy issues, data visualisation and users’ interaction. In doing so, IC measurement, reporting and auditing need to keep focusing on how human capital and organisational and technical processes (structural capital) can unlock or even obstruct Big Data’s value for IC.

Research limitations/implications

The topic of Big Data in IC and accounting research is in its infancy; therefore, this paper acts at a normative level. While this represents a research limitation of the study, it is also a call for future empirical studies.

Practical implications

Once again, practitioners and researchers need to face the challenge of avoiding the trap of IC accountingisation to make IC accounting relevant for the Big Data revolution. Within the euphoric and utopian views of the Big Data revolution, this paper contributes to enriching awareness about the practical factors underpinning Big Data’s value for IC and foster the cognitive and behavioural dynamic between data, IC information and user interaction.

Social implications

The paper is relevant to prepares, users and auditors of financial statements.

Originality/value

This paper aims to instill a novel debate on Big Data into IC accounting research by providing new avenues for future research.

Details

Meditari Accountancy Research, vol. 26 no. 3
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 18 September 2019

Matteo La Torre, Vida Lucia Botes, John Dumay and Elza Odendaal

Privacy concerns and data security are changing the risks for businesses and organisations. This indicates that the accountability of all governance participants changes…

Abstract

Purpose

Privacy concerns and data security are changing the risks for businesses and organisations. This indicates that the accountability of all governance participants changes. This paper aims to investigate the role of external auditors within data protection practices and how their role is evolving due to the current digital ecosystem.

Design/methodology/approach

By surveying the literature, the authors embrace a practice-oriented perspective to explain how data protection practices emerge, exist and occur and examine the auditors’ position within data protection.

Findings

Auditors need to align their tasks to the purpose of data protection practices. Accordingly, in accessing and using data, auditors are required to engage moral judgements and follow ethical principles that go beyond their legal responsibility. Simultaneously, their accountability extends to data protection ends for instilling confidence that security risks are properly managed. Due to the changing technological conditions under, which auditors operate, the traditional auditors’ task of hearing and verifying extend to new phenomena that create risks for businesses. Thus, within data protection practices, auditors have the accountability to keep interested parties informed about data security and privacy risks, continue to transmit signals to users and instill confidence in businesses.

Research limitations/implications

The normative level of the study is a research limitation, which calls for future empirical research on how Big Data and data protection is reshaping accounting and auditing practices.

Practical implications

This paper provides auditing standard setters and practitioners with insights into the redefinitions of auditing practices in the era of Big Data.

Social implications

Recent privacy concerns at Facebook have sent warning signals across the world about the risks posed by in Big Data systems in terms of privacy, to those charged with governance of organisations. Auditors need to understand these privacy issues to better serve their clients.

Originality/value

This paper contributes to triggering discussions and future research on data protection and privacy in accounting and auditing research, which is an emerging, yet unresearched topic.

Details

Managerial Auditing Journal, vol. 36 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 5 December 2018

John Dumay, Matteo La Torre and Federica Farneti

This paper examines the gap between reporting and managers’ behaviour to challenge the current theoretical underpinnings of intellectual capital (IC) disclosure practice…

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2057

Abstract

Purpose

This paper examines the gap between reporting and managers’ behaviour to challenge the current theoretical underpinnings of intellectual capital (IC) disclosure practice and research. The authors explore how the key features from IC and integrated reporting can be combined to develop an extended model for companies to comply with EU Directive 2014/95/EU and increase trust in corporate disclosures and reports.

Design/methodology/approach

This essay relies on academic literature and examples from practice to critique the theories that explain corporate disclosure and reporting but do not change management behaviour. Based on this critique, the authors argue for a change in the fundamental theories of stewardship to frame a new concept for corporate disclosure incorporating using a multi-capitals framework.

Findings

We argue that, while the inconsistency between organisations’ reporting and behaviour persists, increasing, renewing or extending the information disclosed is not enough to instil trust in corporations. Stewardship over a company’s resources is necessary for increasing trust. The unanticipated consequences of dishonest behaviour by managers and shareholders compels a new application of stewardship theory that works as an overarching guide for managerial behaviour and disclosure. Emanating from this new model is a realisation that managers must abandon agency theory in practice, and specifically the bonus contract.

Research limitations/implications

We call for future empirical research to explore the role of stewardship theory within the dynamics of corporate disclosure using the approach. The research implications of those studies should incorporate the potential impacts on management behaviours within a stewardship framework and how those actions, and their outcomes, are disclosed for rebuilding public trust in business.

Practical implications

The implications for integrated reporting and reports complying with the new EU Directive are profound. Both instruments rely on agency theory to coax managers into reducing information asymmetry by disclosing more. However, agency theory only re-affirms the power managers have over corporate information. It does not change their behaviour, nor to act in the interest of all stakeholders as the stewards of an organisation’s resources.

Social implications

We advocate that, in business education, greater emphasis is needed on how stewardship has a more positive impact on management behaviour than agency, legitimacy and stakeholder theories.

Originality/value

We reflect on the current and compelling issues permeating the international landscape of corporate reporting and disclosure and explain why current theories which explain corporate disclosures do not change behaviour or engender trust in business and offer an alternative disclosure model based on stewardship theory.

Details

Journal of Intellectual Capital, vol. 20 no. 1
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 20 June 2018

Matteo La Torre, Svetlana Sabelfeld, Marita Blomkvist, Lara Tarquinio and John Dumay

Motivated by the new European Union Directive 2014/95 on non-financial and diversity information, this paper aims to develop a future research agenda to conduct pragmatic…

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2296

Abstract

Purpose

Motivated by the new European Union Directive 2014/95 on non-financial and diversity information, this paper aims to develop a future research agenda to conduct pragmatic, theory-oriented research into the Directive and corporate sustainability reporting.

Design/methodology/approach

Drawing upon the relational dynamics between states, firms and society in regulating non-financial reporting (NFR), this essay frames and analyses the Directive and its grand theories, as unproven theories, by discussing its practical concerns and reviewing the academic literature.

Findings

The Directive is an act of policy to legitimise NFR that encompasses two grand theories: improve the comparability of information and enhance corporate accountability. From a pluralist perspective, companies can rest assure that their compliance with the Directive will be perceived as socially desirable, proper and appropriate. However, some of the forces involved in translating the Directive into actionable policies operate contra to the Directive’s goals and, instead, act as barriers to its grand theories. In addressing these barriers, a research agenda is proposed that both traces backward to re-examine the foundational theories of the past and looks forward to explore alternative possibilities for achieving these goals.

Research limitations/implications

This paper provides researchers with a practical-driven and theory-oriented agenda for future research in light of the rising academic interest in the Directive.

Practical implications

The barriers to the Directive’s grand theories help policymakers and practitioners to understand the practical concerns about the implementation of the Directive and other mandatory NFR policies.

Originality/value

This paper enriches the emerging debate on the Directive and highlights future possibilities for fruitful empirical research by developing a research agenda.

Details

Meditari Accountancy Research, vol. 26 no. 4
Type: Research Article
ISSN: 2049-372X

Keywords

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Article
Publication date: 11 October 2021

Patrizia Di Tullio, Matteo La Torre, John Dumay and Michele Antonio Rea

The debate about whether corporate reports should focus on numbers or narrative is long-standing. The recent push for business model information to be included in…

Abstract

Purpose

The debate about whether corporate reports should focus on numbers or narrative is long-standing. The recent push for business model information to be included in corporate reports has revitalised the debate. Many scholars suggest this constitutes a move towards narrative-based reporting. This study aims to investigate the debate and draws a comparison with the juxtaposition of the narrative and rational paradigms. This study also investigates how accountingisation influences the way business model information is presented in corporate reports.

Design/methodology/approach

This study analyses data from the financial and non-financial reports from 86 globally listed companies. This study first uses content analysis to code the data. This study then uses a partial least squares-structural equation model to test how accountingisation influences how firms report their business model information.

Findings

This study finds that accountingisation and a rational paradigm shape how companies present information about their business model in their financial and non-financial reports. This suggests that the dominance of quantitative measures in accounting affects even the presentation of narrative-based information. Despite the much-touted shift towards qualitative reporting, this study argues that companies find it difficult to cast off the yoke of a traditional numbers-based mindset.

Research limitations/implications

This paper contributes to the debate on numbers- versus narrative-based corporate reporting and the workings of narrative and rational paradigms. In it, this study lays out theoretical and empirical findings of accountingisation. This study also makes a case for freeing corporate reports from the shackles of an accountingisation mindset.

Originality/value

This study provides new insights into how companies report information about their business models and the influence of narrative and rational paradigms on financial and non-financial reporting.

Details

Journal of Accounting & Organizational Change, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1832-5912

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Article
Publication date: 12 March 2018

Matteo La Torre, Diego Valentinetti, John Dumay and Michele Antonio Rea

The purpose of this paper is to examine the potential for eXtensible Business Reporting Language (XBRL) to go beyond static reporting. A taxonomy structure of information…

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1442

Abstract

Purpose

The purpose of this paper is to examine the potential for eXtensible Business Reporting Language (XBRL) to go beyond static reporting. A taxonomy structure of information is developed for providing a knowledge base and insights for an XBRL taxonomy for integrated reporting (IR).

Design/methodology/approach

Design Science (DS) research, as a pragmatic exploratory research approach, is embraced to create a new “artefact” and thematic content analysis is used to analyse IR in practice.

Findings

Using XBRL for IR allows a shift from static and periodic reporting to more relevant and dynamic corporate disclosure for stakeholders, who can navigate and retrieve customised disclosure information according to their interest by exploiting the multidimensionality of IR and overcome some of its criticisms. The bi-dimensional taxonomy structure the authors’ present allows users to navigate disclosure from two different perspectives (content elements (CE) and capitals), display specific themes of interest, and drill down to more detailed information. Because of its evidence-based nature and levels of disaggregation, it provides flexibility to preparers and users of information. Additionally, the findings demonstrate the need to codify sector-specific information for the CE, so that to direct the efforts toward the development of sector-specific taxonomy extensions in developing an XBRL taxonomy for IR.

Research limitations/implications

The limitations of DS research are, first, the artefact design and, second, its effects in practice. The first limitation stems from the social actors’ perspective taken into account to develop the taxonomy structure, which derives from the analysis of the reporting practices rather than a pluralistic approach and dialogic engagement. The second limitation relates to the XBRL taxonomy development process because, since the study is limited to the “design” phase being codification and structuring the knowledge base for an XBRL taxonomy, there is a need to develop a taxonomy in XBRL and then apply it in practice to empirically demonstrate the potential and benefits of XBRL in the IR context.

Practical implications

The taxonomy structure is targeted at entities interested in designing an XBRL taxonomy for IR. This is a call for academics and practitioners to explore the potential of technology to improve corporate disclosure and open up new projections for resurging themes on intellectual capital (IC) reporting with prospects for IC “fourth-stage” research focused on IC disclosure.

Originality/value

This is an interdisciplinary research employing the DS approach, which is rooted in information systems research. It is the first academic study providing pragmatic results for using XBRL in the context of IC and IR.

Details

Journal of Intellectual Capital, vol. 19 no. 2
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 30 July 2018

Matteo La Torre, John Dumay and Michele Antonio Rea

Reflecting on Big Data’s assumed benefits, this study aims to identify the risks and challenges of data security underpinning Big Data’s socio-economic value and…

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1211

Abstract

Purpose

Reflecting on Big Data’s assumed benefits, this study aims to identify the risks and challenges of data security underpinning Big Data’s socio-economic value and intellectual capital (IC).

Design/methodology/approach

The study reviews academic literature, professional documents and public information to provide insights, critique and projections for IC and Big Data research and practice.

Findings

The “voracity” for data represents a further “V” of Big Data, which results in a continuous hunt for data beyond legal and ethical boundaries. Cybercrimes, data security breaches and privacy violations reflect voracity and represent the dark side of the Big Data ecosystem. Losing the confidentiality, integrity or availability of data because of a data security breach poses threat to IC and value creation. Thus, cyberthreats compromise the social value of Big Data, impacting on stakeholders’ and society’s interests.

Research limitations/implications

Because of the interpretative nature of this study, other researchers may not draw the same conclusions from the evidence provided. It leaves some open questions for a wide research agenda about the societal, ethical and managerial implications of Big Data.

Originality/value

This paper introduces the risks of data security and the challenges of Big Data to stimulate new research paths for IC and accounting research.

Details

Meditari Accountancy Research, vol. 26 no. 3
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 2 October 2017

John Dumay, Cristiana Bernardi, James Guthrie and Matteo La Torre

This paper is motivated by the call for feedback by the International Integrated Reporting Council (IIRC) from all stakeholders with knowledge of the International…

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3582

Abstract

Purpose

This paper is motivated by the call for feedback by the International Integrated Reporting Council (IIRC) from all stakeholders with knowledge of the International Integrated Reporting Framework (<IRF>) and specifically of the enablers, incentives and barriers to its implementation. The paper synthesises insights from contemporary accounting research into integrated reporting (IR) as a general concept and <IR> as espoused by the IIRC in the <IRF> (IIRC, 2013). The authors specifically focus on possible barriers and emphasise the specific issues the authors feel could be rectified to advance the <IRF>, along with the areas that may potentially hinder its wider adoption and implementation.

Design/methodology/approach

The paper draws upon and synthesises academic analysis and insights provided in the IR and <IR> academic literature as well as various directives, policy and framework pronouncements.

Findings

The flexibility and lack of prescription concerning actual disclosures and metrics in the <IRF> could allow it to be used for compliance, regardless of the other benefits lauded by the IIRC. Thus the authors see forces, both external and internal, driving <IR> adoption, with one prominent example being the European Union Directive on non-financial reporting. Because of the different ways in which IR is understood and enacted, there are numerous theoretical and empirical challenges for academics. The authors paper highlights potential areas for further robust academic research and the need to contribute to <IR> policy and practice.

Research limitations/implications

The paper provides the IIRC, academics, regulators and reporting organisations with insights into current practice and the <IRF>. The authors highlight the need for further development and evidence to help inform improvements both from a policy and a practice perspective. A key limitation of the authors’ work is that the authors draw upon a synthesis of the existing literature which is still in an early stage of development.

Originality/value

The paper provides the IIRC with several insights into the current <IRF> and specifically with the enablers, incentives and barriers to its implementation. Also, it provides academic researchers with a number of important observations and an agenda upon which the authors can build their future research.

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Article
Publication date: 4 November 2020

Jonida Carungu, Roberto Di Pietra and Matteo Molinari

This paper aims at investigating the quality of non-financial reporting (NFR) in light of Directive no. 2014/95/EU. Specifically, it focuses on the quality of NFR in…

Abstract

Purpose

This paper aims at investigating the quality of non-financial reporting (NFR) in light of Directive no. 2014/95/EU. Specifically, it focuses on the quality of NFR in Italian companies, as required by Legislative Decree no. 254/2016.

Design/methodology/approach

The method used to develop the analysis is mainly qualitative. A content analysis of 184 non-financial reports (NFRs) was conducted on a sample of 92 companies that have been previously involved in the process of NFR on a voluntary basis. Then, a longitudinal analysis was carried out to assess the quality of the NFR conducted from a voluntary to a mandatory basis.

Findings

This study shows that the quality of NFR does not increase when moving from a voluntary to a mandatory basis, especially for 25% of the companies that publish supplementary sustainability reports and/or plans. This result demonstrates that preparers may perceive mandatory NFR as a comprehensive best practice to adequately report their social, economic and environmental performance.

Originality/value

The contribution of this research is threefold. Firstly, it contributes to the social and environmental accounting literature that focuses on NFR quality assessment. Secondly, it contributes to the literature that emphasizes the role of mimetic, coercive and normative isomorphism mechanisms on accounting systems and reporting practices. Thirdly, it contributes to the research gaps for academics highlighted by previous literature on mandatory corporate reporting as a consequence of normative requirements and on the relationship between regulation and mimetic, coercive and normative isomorphic mechanisms within organizations.

Details

Meditari Accountancy Research, vol. 29 no. 3
Type: Research Article
ISSN: 2049-372X

Keywords

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