Enhancing Financial Reporting Quality: The Association between Alternative Data, Information Timeliness and Analytics Capabilities

Financial reports have traditionally relied on historical data, but this approach is increasingly inadequate in today’s fast-moving and data-rich financial environment. While prior studies have examined individual types of alternative data, such as social media sentiment or web traffic, there has been a limited comprehensive evaluation of how these heterogeneous sources can be integrated with conventional reporting frameworks to enhance financial reporting quality (FRQ). This study, therefore, investigates the role and potential of alternative data, for example, social media sentiment, satellite imagery, geolocation traces, and ESG-related indicators. A narrative review of the literature suggests that alternative data can improve forecasting accuracy, strengthen risk management, and enhance corporate governance; in particular, prior studies document gains in the predictive accuracy of earnings forecasts and a more granular understanding of market behaviour. At the same time, there are significant challenges related to data quality, ethical and lawful use, and the fragmented legal and regulatory environment for alternative data, especially in developing economies. Synthesising these insights, the paper develops a conceptual framework in which alternative data affect FRQ both directly and indirectly via information timeliness, with analytics capabilities acting as a boundary condition that shapes the magnitude of these effects. The study concludes that realising the potential of alternative data will require clearer regulatory guidance, robust data-governance practices and cross-disciplinary collaboration so that these new data sources can be integrated responsibly with existing reporting systems and used to support more transparent and accountable financial decision-making.