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Book part
Publication date: 12 March 2020

Giorgio Mion and Cristian R. Loza Adaui

Public-interest entities – among which are listed companies – are obliged to publish nonfinancial disclosure in some countries and regions. The European Commission established…

Abstract

Public-interest entities – among which are listed companies – are obliged to publish nonfinancial disclosure in some countries and regions. The European Commission established mandatory nonfinancial disclosure by Directive 2014/95/EU. While a large body of literature was developed on sustainability reporting quality (SRQ) in voluntary context, evidence about the effect of mandatory nonfinancial disclosure on SRQ is controversial and previous experiences worldwide did not make clear if obligatoriness improves SRQ. This chapter aims to bridge the gap of empirical evidence about this phenomenon in European countries, focusing on first implementation of new legislation by Italian and German companies. The research has an explorative character and it adopts content analysis methods performed on sustainability reporting practices of companies listed in FTSE-MIB and DAX 30. The analysis aims to understand if obligatoriness affects SRQ, causes some changes in reporting practices such as harmonizing Italian and German ones by performing a cross-country comparison. The findings suggest that obligatoriness improves reporting quality and, above all, it fills the gap between different countries by fostering the adoption of international guidelines and the consequent introduction of some content, such as materiality analysis and quantitative measures of social and environmental performance.

Details

Non-Financial Disclosure and Integrated Reporting: Practices and Critical Issues
Type: Book
ISBN: 978-1-83867-964-4

Keywords

Article
Publication date: 12 March 2024

Olayinka Adedayo Erin and Paul Olojede

The Agenda 2030 have drawn a lot of interest in academic studies. This necessitates accounting research on nonfinancial reporting and sustainable development goals (SDG…

Abstract

Purpose

The Agenda 2030 have drawn a lot of interest in academic studies. This necessitates accounting research on nonfinancial reporting and sustainable development goals (SDG) disclosure in an under-investigated context. The purpose of this study is to examine the contribution of nonfinancial reporting practices to SDG disclosure by 120 companies from 12 African nations for the years 2016 to 2020.

Design/methodology/approach

The study uses a content analysis to gauge how much information are disclosed on SDG by the selected firms. The authors carried out content analysis using the global reporting initiative frameworks to determine the level of SDG disclosure across the companies by examining the selected nonfinancial reports.

Findings

Sustainability reports account for 50% of such SDG disclosure making it the highest. This is followed by corporate social responsibility report which accounts for 23%, while environmental reports account for 20% and Chairman’s statement accounts for 7%. The result is expected since corporate sustainability report has been the major channel for disclosing activities relating to social and governance issues in recent times.

Practical implications

The results of this study demand that corporate entities in Africa take responsibility for their actions and exert significant effort to achieve the SDG. While the government has the main responsibility, corporate entities must support the SDG to be realized.

Originality/value

To the best of the authors’ knowledge, this study is one of the few studies that examines nonfinancial reporting practices with a focus on SDG disclosure. In addition, this study offers novel insight into how accounting research contributes to nonfinancial reporting practices and SDG disclosure.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

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Book part
Publication date: 25 May 2021

Nicoleta-Daniela Milu and Camelia-Daniela Hategan

Introduction: Nonfinancial reporting is the way in which a company provides information to stakeholders on the social, environmental, and economic impact and performance of its…

Abstract

Introduction: Nonfinancial reporting is the way in which a company provides information to stakeholders on the social, environmental, and economic impact and performance of its past and present activities. Aim: The objective of the chapter is to analyze the stage and the way of implementation of the requirements of the Non-Financial Reporting Directive by the Romanian companies. Method: In order to carry out the study, we analyzed, structured, and synthesized the public information in order to identify companies that have the obligation to report, thus 721 companies were identified with more than 500 employees on December 31, 2019. Results: The main identified characteristics of the companies consisted in the fact that most of them carried out the activity in the manufacturing industry, had their headquarters in the Bucharest-Ilfov region, most of the companies operating according to Company Law were not listed on the stock exchange. Regarding the financial indicators, 81% of companies registred profit and 52% had a turnover of more than 50 million euros. Regarding the manner of application of the Directive requirements, from the analyzed sample of 22 companies listed on the stock exchange, it was found that 41% of the companies chose to present the nonfinancial information in a separate report. Conclusion: The level of compliance with reporting requirements is still uncertain, as for most companies the information are not public, only listed companies are concerned with improving reporting. İmplications and Originality of the Chapter: The study may be a benchmark in further analysis of the transparency of nonfinancial information conducted by companies and may help in future analysis of their evolution over time.

Details

Contemporary Issues in Social Science
Type: Book
ISBN: 978-1-80043-931-3

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Article
Publication date: 12 October 2021

Gianluca Zanellato and Adriana Tiron-Tudor

The purpose of the research is to shed light on how the mandatory regulation on nonfinancial information has changed European state-owned enterprises' (SOEs) disclosure levels. In…

Abstract

Purpose

The purpose of the research is to shed light on how the mandatory regulation on nonfinancial information has changed European state-owned enterprises' (SOEs) disclosure levels. In addition, the present research aims to demonstrate, under the lens of legitimacy theory, how Hofstede's cultural dimensions shape social expectations that may have suffered changes after the introduction of a mandatory regulation on nonfinancial reporting.

Design/methodology/approach

The paper adopts a mixed approach. First, it employees the content analysis to investigate the disclosure level on 22 of the 24 European SOEs. Second, the authors demonstrate how cultural dimensions take a different role when a change in regulation is introduced using the qualitative comparative analysis (QCA).

Findings

The results reveal a slight increase in disclosure from the year before introducing the directive. Additionally, the results demonstrate how none of Hofstede's cultural dimensions is responsible for high disclosure levels. Although, the sufficiency analysis outlines several combinations of different cultural dimensions that lead to high disclosure levels. In particular, results demonstrate how the core dimensions leading to the outcome changed once the European Union Directive (EUD) has entered into force.

Research limitations/implications

Despite the contributions, the present study is not free of limitations. As the investigated sample is limited to a small number of SOEs, the content analysis adopts a dichotomous approach. The analysis is conducted on integrated reporting, and the fuzzy set QCA results cannot be used for generalization but refer only to the investigated sample. Consequently, further studies should investigate a broader sample of SOEs and organizations that adopt other nonfinancial reporting frameworks. Additionally, a qualitative approach to the reports' analysis is recommended.

Practical implications

It demonstrates how the EUD on nonfinancial information has impacted the disclosure levels of European SOEs. It adopts a fresh methodology rarely used in accounting. It demonstrates how cultural conditions influence social expectations that determine corporations to disclose more information after the introduction of a regulatory framework.

Originality/value

The paper's theoretical contribution refers to its focus on the public sector, and it adopts a methodology rarely used by accounting scholars.

Details

Journal of Applied Accounting Research, vol. 23 no. 1
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 23 March 2022

Rebecca Bolt and Helen Tregidga

The purpose of this paper is to explore the role and implications of storytelling and narrative as a means of making sense of, and giving sense to, the ambiguous concept of…

Abstract

Purpose

The purpose of this paper is to explore the role and implications of storytelling and narrative as a means of making sense of, and giving sense to, the ambiguous concept of materiality.

Design/methodology/approach

The use of stories was “discovered” through the authors' attempts to “make sense” of data from 16 interviews with participants from the financial and nonfinancial reporting and assurance contexts. The authors analyse the participants' use of stories through a sensemaking/sensegiving lens.

Findings

While participants struggle to define what materiality is, they are able to tell “stories” about materiality in action. The authors find stories are a key vehicle through which participants make sense of and give sense to materiality, for themselves and (an)other. Participants tell three types of stories in sensemaking/sensegiving processes: the lived, the adopted and the hypothetical. The authors further identify “rehearsed” and “ongoing” narratives, which take any of the three story types. The use of stories to make and give sense to materiality reveals a disconnect between the static, technical definitions of materiality currently favoured by standard setters and guidance providers, and the creative authoring processes the participants employ.

Practical implications

The authors argue for a move towards the use of stories and narratives about materiality in standard setting, specifically “materiality in action”, which the findings suggest may assist in creating shared understandings of the ambiguous concept.

Originality/value

While previous research considers what materiality means within financial and nonfinancial reporting and assurance contexts, the authors empirically analyse how people understand and make sense/give sense to materiality. The authors also contribute to the use of sensemaking/sensegiving processes within the accounting literature.

Details

Accounting, Auditing & Accountability Journal, vol. 36 no. 1
Type: Research Article
ISSN: 0951-3574

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Open Access
Article
Publication date: 23 July 2021

Marco Bellucci, Diletta Acuti, Lorenzo Simoni and Giacomo Manetti

This study contributes to the literature on hypocrisy in corporate social responsibility by investigating how organizations adapt their nonfinancial disclosure after a social…

3540

Abstract

Purpose

This study contributes to the literature on hypocrisy in corporate social responsibility by investigating how organizations adapt their nonfinancial disclosure after a social, environmental or governance scandal.

Design/methodology/approach

The present research employs content analysis of nonfinancial disclosures by 11 organizations during a 3-year timespan to investigate how they responded to major scandals in terms of social, environmental and sustainability reporting and a content analysis of independent counter accounts to detect the presence of views that contrast with the corporate disclosure and suggest hypocritical behaviors.

Findings

Four patterns in the adaptation of reporting – genuine, allusive, evasive, indifferent – emerge from information collected on scandals and socially responsible actions. The type of scandal and cultural factors can influence the response to a scandal, as environmental and social scandal can attract more scrutiny than financial scandals. Companies exposed to environmental and social scandals are more likely to disclose information about the scandal and receive more coverage by external parties in the form of counter accounts.

Originality/value

Using a theoretical framework based on legitimacy theory and organizational hypocrisy, the present research contributes to the investigation of the adaptation of reporting when a scandal occurs and during its aftermath.

Details

Accounting, Auditing & Accountability Journal, vol. 34 no. 9
Type: Research Article
ISSN: 0951-3574

Keywords

Book part
Publication date: 3 May 2012

Bruce R. Neumann, Eric Cauvin and Michael L. Roberts

In the growing debate about designing new management control systems (MCS) to include stakeholder values, there has been little discussion about information overload. Stakeholder…

Abstract

In the growing debate about designing new management control systems (MCS) to include stakeholder values, there has been little discussion about information overload. Stakeholder advocates call for including more environmental and related social disclosures but do not consider how information overload might impair the use and interpretation of corporate performance measures. As we know, shareholders and boards of directors are most concerned with market data such as earnings per share, dividend rates, and market value growth. In this chapter, we assert that management control system designers must consider information overload before expanding the MCS to include social and nonfinancial disclosures.

The paradox in expanding MCS is that demand for sustainability performance measures will likely result in overload for both information preparers and information users. Corporate Social Responsibility (CSR) and similar sustainability disclosures are likely to overload MCS and overwhelm the readers and users by performance reports that include multiple dimensions.

CSR affects the design of companies' annual reports because stakeholders are increasingly concerned with how organizations address their social responsibilities and how they disclose their societal responses. Management accountants are accustomed to providing performance measures within an organization and MCS usually have an internal focus. CFOs are often not accustomed to balancing the needs of stakeholders with those of managers and owners. We suggest that companies and CFOs will face an information overload dilemma in making these determinations, and that users will be overloaded in sifting through the multiple dimensions of information that are increasingly being provided. We suggest that the bias toward financial performance measures will distort both the provision of relevant information and the use of sustainability performance measures. We modified the Epstein and Roy sustainability model (2001) to illustrate some of these potential impacts.

We note that the balanced scorecard (BSC) was developed as one such tool to reflect and communicate multiple measures. We summarize a previous study showing how managers ignored multiple performance measures in a performance scorecard study. We then relate our results to some of the information overload literature to support our suggestion that stakeholders will face many of the same information overload issues and constraints when using and processing social disclosures.

Our summary of the information overload literature results in a call for more interdisciplinary information overload research involving real-world contexts and tasks. We note that most of the extant information overload literature is restricted to discipline-based silo-oriented studies and to simplistic evaluations, brand identification, or forecasting tasks. Our study went into some depth to describe the business, its strategies and objectives, and a comparison of actual results to specific goals. As management control systems evolve or are designed to report sustainability data, the issues surrounding increasing complexity and information overload will become exponentially problematic. We suggest that future research also include consideration of information overload conditions facing preparers and disclosers of sustainability measures.

Article
Publication date: 13 October 2022

Simone Pizzi, Salvatore Principale and Elbano de Nuccio

This paper aims to contribute to the emerging debate on materiality with novel and original insights about the managerial and theoretical implications related to the adoption of…

1892

Abstract

Purpose

This paper aims to contribute to the emerging debate on materiality with novel and original insights about the managerial and theoretical implications related to the adoption of the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) as reporting standards. Furthermore, the paper will evaluate the main drivers that favor the combination of the two standards by companies to develop new knowledge about the hierarchical relationship between financial and sustainability materiality.

Design/methodology/approach

Building on a sample of 2,046 US listed companies observed during the period 2017–2020, the research is conducted using quantitative methods. Multinomial logistic regressions are used to evaluate the differences between GRI and SASB’s adoption.

Findings

The analysis highlights that financial and sustainability materiality are driven by different purposes. In detail, SASB’s adoption is driven by factors directly related to financial dynamics, while GRI’s adoption is influenced by the existence of corporate governance mechanisms inspired by sustainable and ethical principles. Furthermore, the last analysis reveals that the combination of the two standards is characterized by the predominance of sustainability materiality.

Originality/value

To the best of the authors’ knowledge, this is the first empirical study on the relationship between financial and sustainability materiality.

Details

Meditari Accountancy Research, vol. 31 no. 6
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 11 April 2023

Arash Arianpoor, Mahdi Salehi and Fereshteh Daroudi

The purpose of this study is to assess the impact of nonfinancial sustainability reporting (NFSR) on enterprise value moderated by the management legitimate authority (MLA) for…

Abstract

Purpose

The purpose of this study is to assess the impact of nonfinancial sustainability reporting (NFSR) on enterprise value moderated by the management legitimate authority (MLA) for companies listed on the Tehran Stock Exchange.

Design/methodology/approach

To this aim, 190 firms were assessed during 2014–2019. This study used Arianpoor and Salehi’s indicators. The scoring method for NFSR, environmental sustainability reporting (ESR), social sustainability reporting (SSR) and governance sustainability reporting (GSR) was based on Zimon et al. Also, the CEO pay slice index was used to calculate the management’s legitimate authority. Tobin’s Q was used as a standard measure for the firm value, providing a suitable means of comparison.

Findings

The results revealed that NFSR affects enterprise value positively. In addition, ESR and SSR positively affect the enterprise value. However, GSR did not affect the enterprise value. MLA affects the relationship between NFSR/ESR/SSR/GSR and enterprise value, resulting from the effect of MLA on firm-related information quality and transparency.

Practical implications

Linking NFSR and management’s legitimate authority to firm value will enable managers to lead in helping firms enhance transparency and disclosure, improving their reporting standards and increasing the enterprise value. This, in turn, will ultimately result in better sustainability and governance practices.

Social implications

The results can help understand that analysts and investors somehow consider discussions related to the NFSR in decisions related to the company’s value, and positive market reactions to these practices’ disclosures can motivate firms to improve value and performance.

Originality/value

The majority of prior research in this field has focused on developing countries. An international perspective is critical, and this study helps draw a more contextualized picture of sustainability than before. In addition, the present research explored the management’s legitimate authority role, which is considered an innovative aspect.

Article
Publication date: 17 March 2023

Abir Hichri

This paper aims to investigate the effect of audit quality and environmental auditing on integrated reporting and the effect of environmental auditing on audit quality.

Abstract

Purpose

This paper aims to investigate the effect of audit quality and environmental auditing on integrated reporting and the effect of environmental auditing on audit quality.

Design/methodology/approach

Data was collected from a sample of 300 international companies during the period 2010–2019. The author collected the data from the Thomson Reuters Eikon database, sustainability reports and annual reports. A multiple regression analysis was performed to test the hypotheses.

Findings

The finding of this study confirms a positive and significant relationship between audit quality and integrated reporting. It is also found that environmental auditing has a positive and significant effect on integrated reporting. Thus, this study found a positive and significant relationship between environmental auditing and audit quality.

Practical implications

The findings in this paper identify strategies for improving integrated reporting as a crucial element in the processing of financial and nonfinancial information, to help managers and investors and shareholders take a long-term perspective. Therefore, the results encourage companies to invest in economic, environmental and social aspects. This enables accounting professionals, stock exchange authorities and users of environmental and social information to be aware of the factors associated with environmental reporting, to improve the efficiency of those producing the audit service.

Originality/value

The originality of this study lies in its consideration of a particular aspect of auditing, namely, environmental auditing. However, despite the large body of research on auditing and integrated reporting, to the best of the author’s knowledge, this is the first study to examine the relationship between environmental auditing and integrated reporting. Furthermore, in this research, the author has emphasized the importance of the role played by environmental auditing on audit quality. This design has been neglected in previous studies. Finally, the choice of the field of investigation for the reliability of the data used and the generalization of the results obtained, enables us to make important contributions to the user of the information.

Details

European Business Review, vol. 35 no. 3
Type: Research Article
ISSN: 0955-534X

Keywords

1 – 10 of over 3000