IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i8p4860-d796570.html
   My bibliography  Save this article

Mandatory Non-Financial Information Disclosure under European Directive 95/2014/EU: Evidence from Portuguese Listed Companies

Author

Listed:
  • Cecília Carmo

    (GOVCOPP (Research Unit on Governance, Competitiveness and Public Policies), ISCA-UA (Higher Institute of Accounting and Administration-University of Aveiro), 3810-193 Aveiro, Portugal)

  • Cristiana Ribeiro

    (ISCA-UA (Higher Institute of Accounting and Administration-University of Aveiro), 3810-193 Aveiro, Portugal)

Abstract

This paper investigates the effects of Directive 95/2014/EU on the quality of non-financial information (NFI) disclosed by Portuguese listed companies and explains the reporting practices adopted in this context. For this purpose, a content analysis of non-financial disclosures made a year before (2016) and in the first and second years of the implementation of the Directive (2017 and 2018) was performed. A self-constructed index that covers the disclosure matters required by the Directive was used to measure the quality of NFI. The findings showed that the major effects on the quality of non-financial disclosures were observed in the first year of implementation. Furthermore, it was observed that companies that had high-quality voluntary reporting practices, such as the presentation of a sustainability report, the use of GRI Standards and the certification of NFI, maintained these practices after the Directive. After two years of implementation, there were still companies that did not mention the framework used or did not disclose information on sensitive matters such as human rights or anti-corruption and bribery. The evidence found supports the existence of a ‘routine’ effect that has influenced the reporting practices adopted. The results obtained have implications for policymakers helping them to identify aspects of the Directive’s requirements that need to be improved.

Suggested Citation

  • Cecília Carmo & Cristiana Ribeiro, 2022. "Mandatory Non-Financial Information Disclosure under European Directive 95/2014/EU: Evidence from Portuguese Listed Companies," Sustainability, MDPI, vol. 14(8), pages 1-23, April.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:8:p:4860-:d:796570
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/8/4860/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/8/4860/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Justyna Dyduch & Joanna Krasodomska, 2017. "Determinants of Corporate Social Responsibility Disclosure: An Empirical Study of Polish Listed Companies," Sustainability, MDPI, vol. 9(11), pages 1-24, October.
    2. de Villiers, Charl & Alexander, Deborah, 2014. "The institutionalisation of corporate social responsibility reporting," The British Accounting Review, Elsevier, vol. 46(2), pages 198-212.
    3. Olivier Boiral, 2013. "Sustainability reports as simulacra? A counter-account of A and A+ GRI reports," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 26(7), pages 1036-1071, September.
    4. Denis Cormier & Michel Magnan & Barbara Van Velthoven, 2005. "Environmental disclosure quality in large German companies: Economic incentives, public pressures or institutional conditions?," European Accounting Review, Taylor & Francis Journals, vol. 14(1), pages 3-39.
    5. Laura Sierra-Garcia & Maria Antonia Garcia-Benau & Helena Maria Bollas-Araya, 2018. "Empirical Analysis of Non-Financial Reporting by Spanish Companies," Administrative Sciences, MDPI, vol. 8(3), pages 1-17, July.
    6. Michelon, Giovanna & Pilonato, Silvia & Ricceri, Federica, 2015. "CSR reporting practices and the quality of disclosure: An empirical analysis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 33(C), pages 59-78.
    7. Selena Aureli & Elisabetta Magnaghi & Federica Salvatori, 2019. "The Role of Existing Regulation and Discretion in Harmonising Non-Financial Disclosure," Accounting in Europe, Taylor & Francis Journals, vol. 16(3), pages 290-312, September.
    8. Thomas Riise Johansen, 2016. "EU Regulation of Corporate Social and Environmental Reporting," Social and Environmental Accountability Journal, Taylor & Francis Journals, vol. 36(1), pages 1-9, April.
    9. Łukasz Matuszak & Ewa Różańska, 2017. "CSR Disclosure in Polish-Listed Companies in the Light of Directive 2014/95/EU Requirements: Empirical Evidence," Sustainability, MDPI, vol. 9(12), pages 1-18, December.
    10. Salvatore Loprevite & Domenico Raucci & Daniela Rupo, 2020. "KPIs Reporting and Financial Performance in the Transition to Mandatory Disclosure: The Case of Italy," Sustainability, MDPI, vol. 12(12), pages 1-24, June.
    11. Nida Türegün, 2020. "Accounting for e-commerce sector," International Journal of Critical Accounting, Inderscience Enterprises Ltd, vol. 11(5), pages 429-438.
    12. Geoffrey R. Frost, 2007. "The Introduction of Mandatory Environmental Reporting Guidelines: Australian Evidence," Abacus, Accounting Foundation, University of Sydney, vol. 43(2), pages 190-216, June.
    13. R Day & T Woodward, 2004. "Disclosure of information about employees in the Directors’ report of UK published financial statements: substantive or symbolic?," Accounting Forum, Taylor & Francis Journals, vol. 28(1), pages 43-59, March.
    14. Blerita Korca & Ericka Costa & Federica Farneti, 2021. "From voluntary to mandatory non-financial disclosure following Directive 2014/95/EU: an Italian case study," Accounting in Europe, Taylor & Francis Journals, vol. 18(3), pages 353-377, September.
    15. Andrea Venturelli & Fabio Caputo & Rossella Leopizzi & Simone Pizzi, 2018. "The state of art of corporate social disclosure before the introduction of non-financial reporting directive: a cross country analysis," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 15(4), pages 409-423, December.
    16. Fang Gao & Yi Dong & Chenkai Ni & Renhui Fu, 2016. "Determinants and Economic Consequences of Non-financial Disclosure Quality," European Accounting Review, Taylor & Francis Journals, vol. 25(2), pages 287-317, June.
    17. Dirk van Seventer & Finn Tarp & Nyo Nyo San & Soe Thie Nu Htwe & Thandar, 2020. "A 2017 Social Accounting Matrix for Myanmar," WIDER Working Paper Series wp-2020-66, World Institute for Development Economic Research (UNU-WIDER).
    18. Irja Vormedal & Audun Ruud, 2009. "Sustainability reporting in Norway – an assessment of performance in the context of legal demands and socio‐political drivers," Business Strategy and the Environment, Wiley Blackwell, vol. 18(4), pages 207-222, May.
    19. Lijun Ma & Min Zhang & Jingyu Gao & Tingting Ye, 2020. "The Effect of Religion on Accounting Conservatism," European Accounting Review, Taylor & Francis Journals, vol. 29(2), pages 383-407, March.
    20. Lina Dagilienė & Rūta Nedzinskienė, 2018. "An institutional theory perspective on non-financial reporting," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 16(4), pages 490-521, December.
    21. Fabio Fortuna & Silvia Testarmata & Silvia Sergiacomi & Mirella Ciaburri, 2020. "Mandatory Disclosure of Non-financial Information: A Structured Literature Review," CSR, Sustainability, Ethics & Governance, in: Mara Del Baldo & Jesse Dillard & Maria-Gabriella Baldarelli & Massimo Ciambotti (ed.), Accounting, Accountability and Society, pages 95-128, Springer.
    22. Carlos Larrinaga & Francisco Carrasco & Carmen Correa & Fernando Llena & Jose Moneva, 2002. "Accountability and accounting regulation: the case of the Spanish environmental disclosure standard," European Accounting Review, Taylor & Francis Journals, vol. 11(4), pages 723-740.
    23. Omaima A. G. Hassan & Claire Marston, 2019. "Corporate Financial Disclosure Measurement in the Empirical Accounting Literature: A Review Article," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 54(02), pages 1-54, June.
    24. Horváth & Partners Management Consultants, 2020. "Management Accounting," World Scientific Book Chapters, in: The Controlling Concept Cornerstone of Performance Management, chapter 3, pages 21-74, World Scientific Publishing Co. Pte. Ltd..
    25. A.H. Fatima & Norhayati Abdullah & Maliah Sulaiman, 2015. "Environmental disclosure quality: examining the impact of the stock exchange of Malaysia’s listing requirements," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 11(4), pages 904-922, October.
    26. R K Tailor & Ashoka M L & Parameshwara & Abhishek N, 2020. "Suitability of accounting education to current market," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 11(2), pages 14-23, May.
    27. Lara Tarquinio & Stefanía C. Posadas & Deborah Pedicone, 2020. "Scoring Nonfinancial Information Reporting in Italian Listed Companies: A Comparison of before and after the Legislative Decree 254/2016," Sustainability, MDPI, vol. 12(10), pages 1-22, May.
    28. Fernando Llena & Jose M. Moneva & Blanca Hernandez, 2007. "Environmental disclosures and compulsory accounting standards: the case of spanish annual reports," Business Strategy and the Environment, Wiley Blackwell, vol. 16(1), pages 50-63, January.
    29. Zhichuan Frank Li & Saurin Patel & Srikanth Ramani, 2021. "The Role of Mutual Funds in Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 174(3), pages 715-737, December.
    30. Ntim, Collins G., 2016. "Corporate governance, corporate health accounting, and firm value: The case of HIV/AIDS disclosures in Sub-Saharan Africa," The International Journal of Accounting, Elsevier, vol. 51(2), pages 155-216.
    31. Adriana Tiron-Tudor & Cristina Silvia Nistor & Cristina Alexandrina ªtefãnescu & Gianluca Zanellato, 2019. "Encompassing Non-Financial Reporting in A Coercive Framework for Enhancing Social Responsibility: Romanian Listed Companies’ Case," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 21(52), pages 590-590, August.
    32. Domenico Raucci & Lara Tarquinio, 2020. "Sustainability Performance Indicators and Non-Financial Information Reporting. Evidence from the Italian Case," Administrative Sciences, MDPI, vol. 10(1), pages 1-17, February.
    33. Irene Criado-Jiménez & Manuel Fernández-Chulián & Carlos Larrinaga-González & Francisco Husillos-Carqués, 2008. "Compliance with Mandatory Environmental Reporting in Financial Statements: The Case of Spain (2001–2003)," Journal of Business Ethics, Springer, vol. 79(3), pages 245-262, May.
    34. Burcu Tunç & Burcu Çakmak & Cansu Gökçe Zeybek & Bruno Tissot, 2020. "Using financial accounts - a central banking perspective," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Using financial accounts, volume 51, Bank for International Settlements.
    35. Giorgio Mion & Cristian R. Loza Adaui, 2019. "Mandatory Nonfinancial Disclosure and Its Consequences on the Sustainability Reporting Quality of Italian and German Companies," Sustainability, MDPI, vol. 11(17), pages 1-28, August.
    36. Manuel Branco & Lúcia Rodrigues, 2008. "Factors Influencing Social Responsibility Disclosure by Portuguese Companies," Journal of Business Ethics, Springer, vol. 83(4), pages 685-701, December.
    37. Mara Del Baldo & Jesse Dillard & Maria-Gabriella Baldarelli & Massimo Ciambotti (ed.), 2020. "Accounting, Accountability and Society," CSR, Sustainability, Ethics & Governance, Springer, number 978-3-030-41142-8, May.
    38. Mădălina Dumitru & Justyna Dyduch & Raluca-Gina Gușe & Joanna Krasodomska, 2017. "Corporate Reporting Practices in Poland and Romania – An Ex-ante Study to the New Non-financial Reporting European Directive," Accounting in Europe, Taylor & Francis Journals, vol. 14(3), pages 279-304, September.
    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. Isabel‐María García‐Sánchez & Esther Ortiz‐Martínez & Salvador Marín‐Hernández & Beatriz Aibar‐Guzmán, 2023. "How does the European Green Deal affect the disclosure of environmental information?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2766-2782, November.

    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. Giorgio Mion & Cristian R. Loza Adaui, 2019. "Mandatory Nonfinancial Disclosure and Its Consequences on the Sustainability Reporting Quality of Italian and German Companies," Sustainability, MDPI, vol. 11(17), pages 1-28, August.
    2. Cristian R. Loza Adaui, 2020. "Sustainability Reporting Quality of Peruvian Listed Companies and the Impact of Regulatory Requirements of Sustainability Disclosures," Sustainability, MDPI, vol. 12(3), pages 1-22, February.
    3. Maryna Gulenko, 2018. "Mandatory CSR reporting—literature review and future developments in Germany [Nichtfinanzielle Berichterstattungspflicht – Literaturzusammenfassung und Mögliche Entwicklungen in Deutschland]," NachhaltigkeitsManagementForum | Sustainability Management Forum, Springer, vol. 26(1), pages 3-17, December.
    4. Salvatore Loprevite & Domenico Raucci & Daniela Rupo, 2020. "KPIs Reporting and Financial Performance in the Transition to Mandatory Disclosure: The Case of Italy," Sustainability, MDPI, vol. 12(12), pages 1-24, June.
    5. Adriana TIRON-TUDOR & Teodora Viorica FĂRCAŞ & Ioana DRAGU & Ecaterina Monica MOISE, 2020. "The Road to Transposing the Non-Financial Reporting EU Directive within the Romanian Context – The 2013-2020 Period," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 1(6), pages 63-72, June.
    6. Mărioara Beleneși & Victoria Bogdan & Dorina Nicoleta Popa, 2021. "Disclosure Dynamics and Non-Financial Reporting Analysis. The Case of Romanian Listed Companies," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    7. Chiara Mio & Marco Fasan & Carlo Marcon & Silvia Panfilo, 2021. "Carrot or stick? An empirical analysis of the different implementation strategies of the EU directive on nonfinancial information across Europe," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1591-1605, November.
    8. Nurul Jannah Mustafa Khan & Hasani Mohd Ali, 2023. "Regulations on Non-Financial Disclosure in Corporate Reporting: A Thematic Review," Sustainability, MDPI, vol. 15(3), pages 1-23, February.
    9. Joanna Krasodomska & Justyna Godawska, 2020. "CSR in Non-Large Public Interest Entities: Corporate Talk vs. Actions," Sustainability, MDPI, vol. 12(21), pages 1-19, October.
    10. Fallan, Even & Fallan, Lars, 2019. "Corporate tax behaviour and environmental disclosure: Strategic trade-offs across elements of CSR?," Scandinavian Journal of Management, Elsevier, vol. 35(3).
    11. Christian Danisch, 2021. "The Relationship of CSR Performance and Voluntary CSR Disclosure Extent in the German DAX Indices," Sustainability, MDPI, vol. 13(9), pages 1-20, April.
    12. Giorgio Mion, 2020. "Organizations with Impact? A Study on Italian Benefit Corporations Reporting Practices and Reporting Quality," Sustainability, MDPI, vol. 12(21), pages 1-21, October.
    13. Hao Yang & Laura Le Luo & Asit Bhattacharyya, 2021. "Mandatory Environmental Reporting in Australia: An In‐depth Analysis of Quantity and Quality," Abacus, Accounting Foundation, University of Sydney, vol. 57(4), pages 737-779, December.
    14. María Luisa Pajuelo Moreno & Teresa Duarte-Atoche, 2019. "Relationship between Sustainable Disclosure and Performance—An Extension of Ullmann’s Model," Sustainability, MDPI, vol. 11(16), pages 1-33, August.
    15. Renato Camodeca & Alex Almici & Umberto Sagliaschi, 2018. "Sustainability Disclosure in Integrated Reporting: Does It Matter to Investors? A Cheap Talk Approach," Sustainability, MDPI, vol. 10(12), pages 1-34, November.
    16. Carlos Larrinaga-Gonzélez & Vincente Pérez-Chamorro, 2008. "Sustainability Accounting and Accountability in Public Water Companies," Public Money & Management, Taylor & Francis Journals, vol. 28(6), pages 337-343, December.
    17. Marisa Agostini & Ericka Costa, 2012. "Mandatory disclosure about environmental and employee matters in Italian listed corporate groups' reports," Working Papers 6, Department of Management, Università Ca' Foscari Venezia.
    18. Isabel‐María García‐Sánchez & Esther Ortiz‐Martínez & Salvador Marín‐Hernández & Beatriz Aibar‐Guzmán, 2023. "How does the European Green Deal affect the disclosure of environmental information?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2766-2782, November.
    19. Dorota Dobija & Claudia Arena & Łukasz Kozłowski & Joanna Krasodomska & Justyna Godawska, 2023. "Towards sustainable development: The role of directors' international orientation and their diversity for non‐financial disclosure," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 66-90, January.
    20. Camelia-Daniela Hategan & Ruxandra-Ioana Pitorac & Nicoleta-Daniela Milu, 2021. "Assessment of the Mandatory Non-Financial Reporting of Romanian Companies in the Circular Economy Context," IJERPH, MDPI, vol. 18(24), pages 1-17, December.

    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:gam:jsusta:v:14:y:2022:i:8:p:4860-:d:796570. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.