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1 – 10 of over 1000Akrum Helfaya, Mark Whittington and Chandana Alawattage
The purpose of this paper is to provide a multidimensional model for assessing the quality of corporate environmental reporting (CER) incorporating both preparer- and user-based…
Abstract
Purpose
The purpose of this paper is to provide a multidimensional model for assessing the quality of corporate environmental reporting (CER) incorporating both preparer- and user-based views.
Design/methodology/approach
As opposed to frequently used researcher-chosen proxies, the authors used an online questionnaire asking preparers and users how they assess the quality of a company’s environmental report.
Findings
The analysis of the responses of 177 users and 86 preparers shows that quantity was not perceived as the most significant element in determining quality. Besides quantity, the respondents also perceived information types, measures used, themes disclosed, adopting reporting guidelines, inclusion of assurance statement and the use of visual tools as significant dimensions/features of reporting quality.
Research limitations/implications
The online questionnaire has some limitations, especially in terms of researcher being absent to clarify meanings and, hence, possibilities that respondents may misinterpret the questionnaire elements.
Practical implications
Considering that robust, reliable measurement of reporting quality is difficult, preparers, standard setters and policy makers need multidimensional quality models that incorporate both users’ perceptions of quality and preparers’ pragmatic understanding of the quality delivery process. These will make the preparers informed of whether their disclosure may be falling short of users’ expectations.
Originality/value
Amid, increasing complexity of CER, the research contributes to the growing body of literature on assessing the quality of CER by developing a less subjective, multidimensional, preparer–user-based quality model. This innovative quality model goes beyond the traditional quality models, subjective author-based quality measures. Focussing on the three dimensions of reporting quality – content, credibility and communication – it also offers a high-level resolution of meaning of CER quality.
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A.M.I. Lakshan, Mary Low and Charl de Villiers
The international integrated reporting framework encourages organisations to disclose material information that affects their ability to create value. This paper aims to…
Abstract
Purpose
The international integrated reporting framework encourages organisations to disclose material information that affects their ability to create value. This paper aims to investigate the challenges and techniques preparers of integrated reports use to determine the materiality of non-financial information.
Design/methodology/approach
This paper uses an exploratory interpretive thematic analysis and an archival research approach. Qualitative semi-structured interviews were conducted with 55 integrated reporting (IR) preparers in 12 publicly listed companies, supported by the perusal of the companies’ integrated annual reports over a three-year period.
Findings
IR preparers find materiality determination for non-financial information challenging. This study found that preparers convert challenges into opportunities by using materiality disclosures as image-enhancing marketing tools, which causes concerns regarding weak accountability and a deviation from the International Integrated Reporting Council’s objective of improving information quality. This study found that IR preparers use various techniques in conjunction to determine materiality levels, as well as whether to disclose non-financial information in their integrated reports. The institutional isomorphism lens used in the study highlighted the issues IR preparers faced in their determined efforts of IR materiality levels under mimetic and normative isomorphism pressures.
Research limitations/implications
The challenges and techniques identified can contribute to the development of a framework for materiality level determination for non-financial information.
Practical implications
Regulators who are concerned with ensuring sufficient information to improve investor decision-making will be interested in the techniques IR preparers use to determine materiality levels for non-financial information, to improve their regulations and frameworks.
Originality/value
This study contributes to the literature regarding challenges with materiality level determination in integrated reports and techniques used by IR preparers. The application of an institutional isomorphism lens led to greater insight and understanding of IR preparers’ challenges and techniques in materiality determination. This paper makes a number of significant contributions to the IR literature. First, it identifies the usefulness of material information for decision-making and the influence stakeholders have on the materiality determination of non-financial information, which have not been mentioned in the prior literature. Second, the literature is silent on how organisations relate materiality to value creation for the purposes of determining the materiality content of an integrated report; this research provides empirical evidence of the use of value creation criteria in materiality determination. Third, the study highlights that materiality is a combination of efforts that involves everyone in an organisation. Further, the strategy should be linked to IR and preparers have indicated that integrated thinking is required for materiality determination.
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Jill Hooks, Natasja Steenkamp and Ross Stewart
Companies use figures within the annual report to send messages. The purpose of this paper is to explore the opinions and understandings of annual report preparers who produce the…
Abstract
Purpose
Companies use figures within the annual report to send messages. The purpose of this paper is to explore the opinions and understandings of annual report preparers who produce the figures and users who interpret them. The focus is on figures that the authors consider convey messages about the company's intellectual capital (IC).
Design/methodology/approach
The paper used a questionnaire to obtain the opinions of “informed investors” and conducted interviews with the preparers of the annual reports. It compared the opinions of the two respondent groups.
Findings
Preparers and users bring multiple meanings to the figures. Users overlooked some messages which were complex and symbolic and also perceived more messages than intended by the preparers. The two respondent groups generally perceived brands, corporate image building and aspects related to employees as the IC items best portrayed in the selected figures. Most users and some preparers perceived the main reason for using figures was their strength as a marketing tool.
Research limitations/implications
The paper is exploratory in nature and there is scope to extend the work to a greater number of annual reports and/or figures. The research is limited by the use of students as a proxy for users of annual reports.
Practical implications
The findings may be helpful to annual report preparers in understanding the rhetorical impact of images. Such understanding will help them in choosing figures which are effective and persuasive when seeking user engagement.
Originality/value
The authors are not aware of any prior research that examines the perceptions of preparers and users in respect of messages conveyed through figures, and, in particular, research that incorporates aspects of IC in corporate annual report figures. The paper, therefore, extends the empirical literature on IC.
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Dessalegn Getie Mihret, Monika Kansal, Mohammad Badrul Muttakin and Tarek Rana
This study aims to examine the setting of International Standards on Auditing (ISA) 701 on disclosing key audit matters (KAMs) to explore the role of standard setting in…
Abstract
Purpose
This study aims to examine the setting of International Standards on Auditing (ISA) 701 on disclosing key audit matters (KAMs) to explore the role of standard setting in maintaining or reconstituting the relationship of the auditing profession with preparers and users of financial reports.
Design/methodology/approach
This study draws on concepts from the sociology of the professions literature and the regulatory space metaphor. Data comprises comment letters and other documents pertaining to the setting of ISA 701.
Findings
The study shows that the KAM reporting requirement is part of the ongoing re-calibration of the regulatory arrangements governing auditing, which started in the early 2000s. This study interprets standard setting as a site for negotiating the relationships between linked ecologies in the audit regulatory space, namely, the auditing profession, preparers of financial statements and users of audited reports. This study identifies three processes involved in setting ISA 701, namely, reconstitution of the rules governing auditors’ reports as a link between the three ecologies, preserving boundaries between the auditing profession and preparers and negotiation aimed at balancing competing interests of the interrelated ecologies.
Originality/value
The study offers insights into the role of regulatory rule setting as a central medium through which the adaptive relationship of the profession with its environment is negotiated.
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Simon Lundh, Karin Seger, Magnus Frostenson and Sven Helin
The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.
Abstract
Purpose
The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.
Design/methodology/approach
This interview-based study illustrates how financial report preparers engage in behaviors linked to the perception of recognition and measurement of internally generated intangible assets by important stakeholders. All of the companies included in the study adhere to International Financial Reporting Standards when creating their consolidated financial statements. The participants selected for the study are involved in accounting decisions related to research and development in accordance with International Accounting Standard (IAS) 38.
Findings
The authors identify the normative assumptions underlying the recognition and measurement of internally generated intangibles, which are based on concerns of consistency, credibility and reasonableness. The authors find that the normative basis for legitimacy in financial accounting is primarily related to cognitive legitimacy and is not of a moral or pragmatic nature.
Originality/value
The study reveals that recognition and measurement of internally generated intangibles in financial accounting relate to legitimacy. The authors identify specific norms that form the basis of this legitimacy, namely, consistency, credibility and reasonableness. These identified norms serve as constraints, mitigating the risk of judgment misuse within the IAS 38 framework for earnings management.
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This article investigates the sources of financial information used for decisions regarding the buying, holding and selling of ordinary shares. The results of this…
Abstract
This article investigates the sources of financial information used for decisions regarding the buying, holding and selling of ordinary shares. The results of this questionnaire‐based study indicate that the main source of information used by those who prepare annual reports is stockbroker advice, whereas users of such reports prefer communication with management. Preparers of annual reports support the notion that annual reports are a useful source of information, but users prefer the preliminary announcement. Preparers read the income statement more thoroughly, while users read the cash flow statement more thoroughly. The article also provides information on the qualitative criteria used for assessing the usefulness of accounting practices, and some comments on the importance of setting standards and the objectives of the South African Statements of Generally Accepted Accounting Practice.
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Marek Reuter and Martin Messner
The purpose of this paper is to examine formal participation in the early phase of the International Integrated Reporting Council’s (IIRC’s) standard-setting. The objective of the…
Abstract
Purpose
The purpose of this paper is to examine formal participation in the early phase of the International Integrated Reporting Council’s (IIRC’s) standard-setting. The objective of the paper is to shed light on the characteristics of lobbying parties and the determinants of their lobbying behavior toward the IIRC. Additionally, the most important points of contestation regarding the IIRC’s initial proposal for integrated reporting are identified and discussed.
Design/methodology/approach
The authors analyze comment letters issued toward the IIRC’s 2011 discussion paper on the basis of a content analysis. The analysis is guided mainly by Sutton’s (1984) rational-choice model of lobbying and by findings from extant financial accounting lobbying research. The analysis of the data is both quantitative and qualitative.
Findings
The paper improves the understanding of the political nature of standard-setting in the context of integrated reporting. Among other things, the authors find that comment letters toward the IIRC’s discussion paper are mainly written by large multinational firms (as opposed to small- and medium-sized ones) and by preparers (as opposed to users). The authors also observe active lobbying by sustainability service firms and professional bodies which tend to take a critical position vis-à-vis the discussion paper’s emphasis on investor needs and shareholder value creation. Moreover, the qualitative analysis reveals that respondents voice different concerns regarding, for instance, the scope of audience of integrated reporting, issues of materiality and the relationship between integrated reporting and other existing reporting frameworks.
Research limitations/implications
The analysis is limited to a consideration of the 2011 discussion paper of the IIRC. The IIRC’s more recent and forthcoming proposals will likely provide a basis to extend the paper’s findings and allow investigation of the role of lobbying for the further development of the framework.
Originality/value
The paper is, to the best of the knowledge, the first one to explore lobbying behavior by means of comment letters in the context of integrated reporting.
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Desi Adhariani and Charl de Villiers
This paper aims to explore the perspectives of corporate report preparers and other stakeholders on integrated reporting (IR) in a major Southeast Asian economy.
Abstract
Purpose
This paper aims to explore the perspectives of corporate report preparers and other stakeholders on integrated reporting (IR) in a major Southeast Asian economy.
Design/methodology/approach
A survey is used to explore perspectives on IR.
Findings
There is a limited level of knowledge regarding IR, but a high level of interest. Corporate report preparers paradoxically state that they can see the benefits of IR, yet they are reluctant to implement it.
Practical implications
Changes to university curricula, training sessions, seminars and conferences may be needed to disseminate information regarding IR.
Social implications
IR implementation may be stymied by the low levels of knowledge in Southeast Asia and hence lack of demand from stakeholders. High-quality reporting generally supports capital flows into a region and thus influences economic and social well-being. The integrated financial and non-financial information needs of stakeholders thus have an indirect impact on society.
Originality/value
Southeast Asia is an economic powerhouse and home to hundreds of millions of people. It is important to understand the potential for IR in this region. This is the first survey of its kind to explore these matters.
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This study measures and compares the expectations of two different groups – the first is selected preparers of environmental reports (ERs) in South Africa (companies and…
Abstract
This study measures and compares the expectations of two different groups – the first is selected preparers of environmental reports (ERs) in South Africa (companies and professional environmental consultants), and the second is selected users of ERs (this included environmental activists, pressure groups and non‐governmental organisations [NGOs] with environmentally related objectives(. The study considers the perceived importance of environmental reports, the areas that are reported on and the levels of disclosure. It compares and contrasts the expectations of the above groups. The study found significant differences between the expectations of the groups. Predictably, the responses of the users showed expectations of higher levels of disclosure than those of professional environmental consultants, who in turn expected higher levels of disclosure than company respondents. Significant differences were found between the responses of the groups with regard to the importance of specific areas of environmental disclosure. The study shows that there is evidence of a gap between the expectations of the different groups, and hence that there is a need for improved environmental reporting in South Africa.
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Alessandro Lai, Gaia Melloni and Riccardo Stacchezzini
This paper aims to understand how the principle of materiality gets implemented in integrated reporting (IR) contexts.
Abstract
Purpose
This paper aims to understand how the principle of materiality gets implemented in integrated reporting (IR) contexts.
Design/methodology/approach
Drawing on an interpretation of materiality as a social construction, this research explores the meaning that practitioners attach to the principle during their implementation of it. Following an existing framework for exploring materiality in corporate reporting, this study investigates the meaning by focusing on who participates in determining IR materiality and to whom the IR is addressed. This analysis benefits from in-depth interviews with persons involved in the preparation of IR for a firm that pioneered this form of reporting.
Findings
In IR preparers’ view, the meaning of materiality corresponds with the company strategy: The IR describes strategic priorities and related actions and results. Capital providers are the primary intended addressees of the material information. Although several actors engage in IR preparation, the materiality determination process is governed by a specific “IR hub” in strict collaboration with and dependence on the chief financial officer.
Research limitations/implications
In an IR context, materiality is intimately connected to the function that preparers assign to the report.
Originality/value
This novel research opens the “black box” of the process by which materiality gets defined and then practically implemented in an IR context.
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