When a sector-specific standard for non-financial reporting is not enough: evidence from microfinance institutions in Italy

Purpose - This paper aims to investigate the application of the Italian Banking Association (ABI) industry-specific reporting standard in microfinance institutions by determining whether or not a banking sector reporting standard can enhance non-financial reporting (NFR) quality and volume to meet stakeholders’ information needs in the specific setting investigated. Design/methodology/approach - This paper develops an analysis of available ABI documents from 2006 to 2013 to conduct a content analysis of the quality and volume of the NFR of 98 Italian cooperative banks (CBs) during the 2008–2009 ABI implementation year. These data are analysed using two regression models to investigate the quality and volume of NFR disclosures. Findings - The findings suggest that for CBs in the Italian banking sector, the information provided in the non-financial reports in adherence to the ABI sector reporting standard is relevant in terms of both volume and quality. However, when investigating specific categories of disclosure such as the community, the relevance of the ABI reporting standard is fairly low. The authors question the “one-size-fits-all” approach favouring a more sector-tailored approach to ensure that the NFR covers key sectoral concerns. Practical implications - The high heterogeneity in the sector could negatively affect the capability of sector-specific standards to truly foster reliable, complete and extensive NFR. Therefore, NFR standard-setters, such as the International Sustainability Standards Board, should consider these heterogeneities. Social implications - Reporting standardisation should be multi-voiced and include different – even contrasting – perspectives to promote expert and non-expert engagements. Originality/value - This paper focuses on hybrid organisations and shows how the theoretical approach of dialogic accountability can improve the quality of sector-specific reporting standards.