IDEAS home Printed from https://ideas.repec.org/a/wly/corsem/v26y2019i1p29-45.html
   My bibliography  Save this article

Integrated reporting: The mediating role of the board of directors and investor protection on managerial discretion in munificent environments

Author

Listed:
  • Isabel‐María García‐Sánchez
  • Jennifer Martínez‐Ferrero
  • María‐Antonia Garcia‐Benau

Abstract

Is there a relationship between managerial discretion in munificent environments and the propensity to disclose an integrated reporting? Is this relationship contingent on the board of directors and investor protection? For an international sample for 2006–2014, this paper supports the assertion that managers are more able to extract superior perquisites when the level of accumulated cash holding is higher; that is, in munificent contexts. Because of the greater managerial discretion in these contexts, managers show a lower incentive to disclose voluntary information through an integrated report, which decreases the firm's transparency. Nonetheless, the board of directors and the level of investor protection, as control mechanisms, play an active role in constraining managerial discretion and improving the firm's transparency. The lower dissemination of integrated reporting in munificent contexts—where managerial discretion is greater—is moderated when the board is stronger and in countries with higher levels of investor protection.

Suggested Citation

  • Isabel‐María García‐Sánchez & Jennifer Martínez‐Ferrero & María‐Antonia Garcia‐Benau, 2019. "Integrated reporting: The mediating role of the board of directors and investor protection on managerial discretion in munificent environments," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(1), pages 29-45, January.
    • Handle: RePEc:wly:corsem:v:26:y:2019:i:1:p:29-45
    DOI: 10.1002/csr.1655
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/csr.1655
    Download Restriction: no
    File URL: https://libkey.io/10.1002/csr.1655?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bruno Deffains & Jean-Daniel Guigou, 2002. "Droit, gouvernement d'entreprise et marchés de capitaux," Revue d'économie politique, Dalloz, vol. 112(6), pages 791-821.
    2. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    3. Doidge, Craig & Andrew Karolyi, G. & Stulz, Rene M., 2007. "Why do countries matter so much for corporate governance?," Journal of Financial Economics, Elsevier, vol. 86(1), pages 1-39, October.
    4. John A. Pearce & Shaker A. Zahra, 1992. "Board Composition From A Strategic Contingency Perspective," Journal of Management Studies, Wiley Blackwell, vol. 29(4), pages 411-438, July.
    5. Christopher Marquis & Michael W. Toffel & Yanhua Zhou, 2016. "Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing," Organization Science, INFORMS, vol. 27(2), pages 483-504, April.
    6. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    7. Bert Scholtens & Feng‐Ching Kang, 2013. "Corporate Social Responsibility and Earnings Management: Evidence from Asian Economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(2), pages 95-112, March.
    8. Michael C. Withers & Markus A. Fitza, 2017. "Do board chairs matter? The influence of board chairs on firm performance," Strategic Management Journal, Wiley Blackwell, vol. 38(6), pages 1343-1355, June.
    9. Bruno Deffains & Jean-Daniel Guigou, 2002. "Droit, gouvernement d’entreprise et marches de capitaux," Cahiers du CEREFIGE 0204, CEREFIGE (Centre Europeen de Recherche en Economie Financiere et Gestion des Entreprises), Universite de Lorraine, revised 2002.
    10. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 2002. "Government Ownership of Banks," Journal of Finance, American Finance Association, vol. 57(1), pages 265-301, February.
    11. Cowan, Adrian & Huang, Chia-Hsing & Padmanabhan, Prasad & Wang, Chi-Hui, 2013. "The determinants of foreign giving: An exploratory empirical investigation of US manufacturing firms," International Business Review, Elsevier, vol. 22(2), pages 407-420.
    12. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    13. Timothy B. Palmer & Robert M. Wiseman, 1999. "Decoupling risk taking from income stream uncertainty: a holistic model of risk," Strategic Management Journal, Wiley Blackwell, vol. 20(11), pages 1037-1062, November.
    14. Hoje Jo & Maretno Harjoto, 2012. "The Causal Effect of Corporate Governance on Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 106(1), pages 53-72, March.
    15. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    16. Shan Zhou & Roger Simnett & Wendy Green, 2017. "Does Integrated Reporting Matter to the Capital Market?," Abacus, Accounting Foundation, University of Sydney, vol. 53(1), pages 94-132, March.
    17. Randall Morck & Lloyd Steier, 2005. "The Global History of Corporate Governance: An Introduction," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 1-64, National Bureau of Economic Research, Inc.
    18. Suzanne Young & Vijaya Thyil, 2014. "Corporate Social Responsibility and Corporate Governance: Role of Context in International Settings," Journal of Business Ethics, Springer, vol. 122(1), pages 1-24, June.
    19. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
    20. Jones, Jj, 1991. "Earnings Management During Import Relief Investigations," Journal of Accounting Research, Wiley Blackwell, vol. 29(2), pages 193-228.
    21. Art Durnev & E. Han Kim, 2005. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," Journal of Finance, American Finance Association, vol. 60(3), pages 1461-1493, June.
    22. Ball, Ray & Kothari, S. P. & Robin, Ashok, 2000. "Corrigendum to "The effect of international institutional factors on properties of accounting earnings"; [Journal of Accounting and Economics 29 (2000) 1-51]," Journal of Accounting and Economics, Elsevier, vol. 30(2), pages 241-241, October.
    23. Hsiang-Lin Chih & Chung-Hua Shen & Feng-Ching Kang, 2008. "Corporate Social Responsibility, Investor Protection, and Earnings Management: Some International Evidence," Journal of Business Ethics, Springer, vol. 79(1), pages 179-198, April.
    24. Irene Goll & Abdul M. A. Rasheed, 1997. "Rational decision‐making and firm performance: the moderating role of the environment," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 583-591, August.
    25. Randall K. Morck, 2005. "A History of Corporate Governance around the World: Family Business Groups to Professional Managers," NBER Books, National Bureau of Economic Research, Inc, number morc05-1, March.
    26. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    27. Nan Sun & Aly Salama & Khaled Hussainey & Murya Habbash, 2010. "Corporate environmental disclosure, corporate governance and earnings management," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(7), pages 679-700, July.
    28. Stefan Schaltegger & Marcus Wagner, 2006. "Integrative management of sustainability performance, measurement and reporting," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 3(1), pages 1-19.
    29. Diego Prior & Jordi Surroca & Josep A. Tribó, 2008. "Are Socially Responsible Managers Really Ethical? Exploring the Relationship Between Earnings Management and Corporate Social Responsibility," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(3), pages 160-177, May.
    30. Hongquan Chen & Saixing Zeng & Han Lin & Hanyang Ma, 2017. "Munificence, Dynamism, and Complexity: How Industry Context Drives Corporate Sustainability," Business Strategy and the Environment, Wiley Blackwell, vol. 26(2), pages 125-141, February.
    31. Jong†Hag Choi & T. J. Wong, 2007. "Auditors' Governance Functions and Legal Environments: An International Investigation," Contemporary Accounting Research, John Wiley & Sons, vol. 24(1), pages 13-46, March.
    32. Ball, Ray & Kothari, S. P. & Robin, Ashok, 2000. "The effect of international institutional factors on properties of accounting earnings," Journal of Accounting and Economics, Elsevier, vol. 29(1), pages 1-51, February.
    33. Daniel Reimsbach & Rüdiger Hahn & Anil Gürtürk, 2018. "Integrated Reporting and Assurance of Sustainability Information: An Experimental Study on Professional Investors’ Information Processing," European Accounting Review, Taylor & Francis Journals, vol. 27(3), pages 559-581, May.
    34. In‐Mu Haw & Bingbing Hu & Lee‐Seok Hwang & Woody Wu, 2004. "Ultimate Ownership, Income Management, and Legal and Extra‐Legal Institutions," Journal of Accounting Research, Wiley Blackwell, vol. 42(2), pages 423-462, May.
    35. Stijn Claessens & Joseph P. H. Fan, 2002. "Corporate Governance in Asia: A Survey," International Review of Finance, International Review of Finance Ltd., vol. 3(2), pages 71-103, June.
    36. Kin-Wai Lee & Gillian Hian-Heng Yeo, 2016. "The association between integrated reporting and firm valuation," Review of Quantitative Finance and Accounting, Springer, vol. 47(4), pages 1221-1250, November.
    37. John Smith & Ros Haniffa & Jenny Fairbrass, 2011. "A Conceptual Framework for Investigating ‘Capture’ in Corporate Sustainability Reporting Assurance," Journal of Business Ethics, Springer, vol. 99(3), pages 425-439, March.
    38. Laura Sierra‐García & Ana Zorio‐Grima & María A. García‐Benau, 2015. "Stakeholder Engagement, Corporate Social Responsibility and Integrated Reporting: An Exploratory Study," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(5), pages 286-304, September.
    39. Stefan Schaltegger & Marcus Wagner, 2011. "Sustainable entrepreneurship and sustainability innovation: categories and interactions," Business Strategy and the Environment, Wiley Blackwell, vol. 20(4), pages 222-237, May.
    40. George Serafeim, 2015. "Integrated Reporting and Investor Clientele," Journal of Applied Corporate Finance, Morgan Stanley, vol. 27(2), pages 34-51, June.
    41. García-Sánchez, Isabel-María & Rodríguez-Ariza, Lázaro & Frías-Aceituno, José-Valeriano, 2013. "The cultural system and integrated reporting," International Business Review, Elsevier, vol. 22(5), pages 828-838.
    42. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    43. Helen Kang & Mandy Cheng & Sidney J. Gray, 2007. "Corporate Governance and Board Composition: diversity and independence of Australian boards," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 194-207, March.
    44. Matthias S. Fifka, 2013. "Corporate Responsibility Reporting and its Determinants in Comparative Perspective – a Review of the Empirical Literature and a Meta‐analysis," Business Strategy and the Environment, Wiley Blackwell, vol. 22(1), pages 1-35, January.
    45. Julia Catharina Jensen & Nicola Berg, 2012. "Determinants of Traditional Sustainability Reporting Versus Integrated Reporting. An Institutionalist Approach," Business Strategy and the Environment, Wiley Blackwell, vol. 21(5), pages 299-316, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohammed S. Y. Omran & Mohammad A. A. Zaid & Aladdin Dwekat, 2021. "The relationship between integrated reporting and corporate environmental performance: A green trial," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 427-445, January.
    2. Isabel María García‐Sánchez & María‐Elena Gómez‐Miranda & Fátima David & Lazaro Rodríguez‐Ariza, 2019. "Analyst coverage and forecast accuracy when CSR reports improve stakeholder engagement: The Global Reporting Initiative‐International Finance Corporation disclosure strategy," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1392-1406, November.
    3. Jannik Gerwanski, 2020. "Does it pay off? Integrated reporting and cost of debt: European evidence," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2299-2319, September.
    4. Md. Abdul Kaium Masud & Md. Harun Ur Rashid & Tehmina Khan & Seong Mi Bae & Jong Dae Kim, 2019. "Organizational Strategy and Corporate Social Responsibility: The Mediating Effect of Triple Bottom Line," IJERPH, MDPI, vol. 16(22), pages 1-18, November.
    5. Graham Gal & Orhan Akisik, 2020. "The impact of internal control, external assurance, and integrated reports on market value," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(3), pages 1227-1240, May.
    6. Abeer Hassan & Ahmed A. Elamer & Suman Lodh & Lee Roberts & Monomita Nandy, 2021. "The future of non‐financial businesses reporting: Learning from the Covid‐19 pandemic," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1231-1240, July.
    7. Chiara Mio & Pier Luigi Marchini & Alice Medioli, 2020. "Forward‐looking information in integrated reports: Insights from “best in class”," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2212-2224, September.
    8. Patrick Velte, 2022. "Archival research on integrated reporting: a systematic review of main drivers and the impact of integrated reporting on firm value," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(3), pages 997-1061, September.
    9. Lucrezia Songini & Anna Pistoni & Patrizia Tettamanzi & Fabrizio Fratini & Valentina Minutiello, 2022. "Integrated reporting quality and BoD characteristics: an empirical analysis," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(2), pages 579-620, June.
    10. Valentina Minutiello & Patrizia Tettamanzi, 2022. "The quality of nonfinancial voluntary disclosure: A systematic literature network analysis on sustainability reporting and integrated reporting," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(1), pages 1-18, January.
    11. Filippo Vitolla & Nicola Raimo & Michele Rubino, 2019. "Appreciations, criticisms, determinants, and effects of integrated reporting: A systematic literature review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(2), pages 518-528, March.
    12. José‐Luis Godos‐Díez & Laura Cabeza‐García & Roberto Fernández‐Gago & Mariano Nieto‐Antolín, 2020. "Does CEO media exposure affect corporate social responsibility?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 825-840, March.
    13. Filippo Vitolla & Nicola Raimo & Michele Rubino & Antonello Garzoni, 2019. "The impact of national culture on integrated reporting quality. A stakeholder theory approach," Business Strategy and the Environment, Wiley Blackwell, vol. 28(8), pages 1558-1571, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martínez-Ferrero, Jennifer & García-Sánchez, Isabel-María, 2017. "Coercive, normative and mimetic isomorphism as determinants of the voluntary assurance of sustainability reports," International Business Review, Elsevier, vol. 26(1), pages 102-118.
    2. Óscar Villarón-Peramato & Jennifer Martínez-Ferrero & Isabel-María García-Sánchez, 2018. "CSR as entrenchment strategy and capital structure: corporate governance and investor protection as complementary and substitutive factors," Review of Managerial Science, Springer, vol. 12(1), pages 27-64, January.
    3. Jannik Gerwanski & Othar Kordsachia & Patrick Velte, 2019. "Determinants of materiality disclosure quality in integrated reporting: Empirical evidence from an international setting," Business Strategy and the Environment, Wiley Blackwell, vol. 28(5), pages 750-770, July.
    4. Lu, Jing & Wang, Jun, 2021. "Corporate governance, law, culture, environmental performance and CSR disclosure: A global perspective," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 70(C).
    5. Cuadrado-Ballesteros, Beatriz & Martínez-Ferrero, Jennifer & García-Sánchez, Isabel María, 2017. "Mitigating information asymmetry through sustainability assurance: The role of accountants and levels of assurance," International Business Review, Elsevier, vol. 26(6), pages 1141-1156.
    6. D'Souza, Juliet & Nash, Robert, 2017. "Private benefits of public control: Evidence of political and economic benefits of state ownership," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 232-247.
    7. Jennifer Martínez-Ferrero & Isabel Gallego-Álvarez & Isabel María García-Sánchez, 2015. "A Bidirectional Analysis of Earnings Management and Corporate Social Responsibility: The Moderating Effect of Stakeholder and Investor Protection," Australian Accounting Review, CPA Australia, vol. 25(4), pages 359-371, December.
    8. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, September.
    9. Pierre Bonetti & Antonio Parbonetti & Michel Magnan, 2013. "The Influence of Country- and Firm-Level Governance on Financial Reporting Quality: Revisiting the Evidence," CIRANO Working Papers 2013s-03, CIRANO.
    10. Guillamon-Saorin, Encarna & Sousa, Carlos M.P., 2010. "Press release disclosures in Spain and the UK," International Business Review, Elsevier, vol. 19(1), pages 1-15, February.
    11. Khosa,Amrinder & Ahmed,Kamran & Henry,Darren, 2019. "Ownership Structure, Related Party Transactions, and Firm Valuation," Cambridge Books, Cambridge University Press, number 9781108492195.
    12. Yasean A. Tahat & Ahmed H. Ahmed & David Power, 2022. "Earnings quality and investment efficiency: the role of the institutional settings," Review of Quantitative Finance and Accounting, Springer, vol. 58(3), pages 1277-1306, April.
    13. Laura Girella & Paola Rossi & Stefano Zambon, 2019. "Exploring the firm and country determinants of the voluntary adoption of integrated reporting," Business Strategy and the Environment, Wiley Blackwell, vol. 28(7), pages 1323-1340, November.
    14. Connelly, J. Thomas & Limpaphayom, Piman & Nagarajan, Nandu J., 2012. "Form versus substance: The effect of ownership structure and corporate governance on firm value in Thailand," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1722-1743.
    15. Jennifer Martínez‐Ferrero & Isabel M. Garcia‐Sanchez & Beatriz Cuadrado‐Ballesteros, 2015. "Effect of Financial Reporting Quality on Sustainability Information Disclosure," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(1), pages 45-64, January.
    16. Pavlopoulos, Athanasios & Magnis, Chris & Iatridis, George Emmanuel, 2017. "Integrated reporting: Is it the last piece of the accounting disclosure puzzle?," Journal of Multinational Financial Management, Elsevier, vol. 41(C), pages 23-46.
    17. Ghazi Zouari & Kawther Dhifi, 2021. "The impact of board characteristics on integrated reporting: case of European companies," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(1), pages 83-94, March.
    18. Abdullah Alsaadi, 2021. "Can Inclusion in Religious Index Membership Mitigate Earnings Management?," Journal of Business Ethics, Springer, vol. 169(2), pages 333-354, March.
    19. Cristina Gaio, 2010. "The Relative Importance of Firm and Country Characteristics for Earnings Quality around the World," European Accounting Review, Taylor & Francis Journals, vol. 19(4), pages 693-738.
    20. Filip, Andrei & Raffournier, Bernard, 2014. "Financial Crisis And Earnings Management: The European Evidence," The International Journal of Accounting, Elsevier, vol. 49(4), pages 455-478.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:corsem:v:26:y:2019:i:1:p:29-45. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1535-3966 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.