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Corporate Governance, Integrated Reporting and the Use of Credibility-enhancing Mechanisms on Integrated Reports

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  • Ruizhe Wang
  • Shan Zhou
  • Timothy Wang

Abstract

The International Integrated Reporting Council (IIRC) and the South African King III Report on Governance emphasize the role of corporate governance in preparing a high-quality integrated report and establishing an appropriate credibility-enhancing process. This paper examines the significance of corporate governance mechanisms in explaining variations in the quality of integrated reports and the extent and quality of credibility-enhancing mechanisms (CEMs) for integrated reports. Using a sample of integrated reports published between 2012 and 2015 by listed companies on the Johannesburg Stock Exchange, this study finds that traditional governance mechanisms such as the board and the audit committee are positively related to the reporting quality of and use of CEMs. In addition, sustainability-oriented corporate governance mechanisms (i.e. sustainability committee and the use of non-financial performance measures in executives’ compensation contracts) have an incremental positive effect on both the quality of and the extent and quality of CEMs on integrated reports. Additional analyses attribute the positive effect of these corporate governance mechanisms on quality and the use of CEMs mainly to the diligence and expertise of the board of directors and audit committee and the independence and expertise of a sustainability committee.

Suggested Citation

  • Ruizhe Wang & Shan Zhou & Timothy Wang, 2020. "Corporate Governance, Integrated Reporting and the Use of Credibility-enhancing Mechanisms on Integrated Reports," European Accounting Review, Taylor & Francis Journals, vol. 29(4), pages 631-663, July.
    • Handle: RePEc:taf:euract:v:29:y:2020:i:4:p:631-663
    DOI: 10.1080/09638180.2019.1668281
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    Cited by:

    1. Laura Bini & Francesco Giunta & Rebecca Miccini & Lorenzo Simoni, 2023. "Corporate governance quality and non-financial KPI disclosure comparability: UK evidence," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(1), pages 43-74, March.
    2. Monique Bruwer & Salomé Elizabeth Scholtz & Leon Tielman De Beer & Johanna Christina Rothmann, 2022. "The Human Capital Risk Reporting of Listed South African Companies: Exploring a Reporting Framework to Support Corporate Governance," Administrative Sciences, MDPI, vol. 12(4), pages 1-24, September.
    3. Patrick Velte, 2022. "Does sustainable corporate governance have an impact on materiality disclosure quality in integrated reporting? International evidence," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1655-1670, December.
    4. Mohammed Hammam Mohammed Al-Madani & Yudi Fernando & Ming-Lang Tseng, 2022. "Assuring Energy Reporting Integrity: Government Policy’s Past, Present, and Future Roles," Sustainability, MDPI, vol. 14(22), pages 1-24, November.
    5. Henry Kuswantoro & Mahfud Sholihin & Hadrian Geri Djajadikerta, 2023. "Exploring the implementation of sustainable development goals: a comparison between private and state-owned enterprises in Indonesia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 10799-10819, October.
    6. Maria Albertina Barreiro Rodrigues & Ana Isabel Morais, 2021. "How to Challenge University Students to Work on Integrated Reporting and Integrated Reporting Assurance," Sustainability, MDPI, vol. 13(19), pages 1-19, September.
    7. Soon‐Yeow Phang & Hien Hoang, 2021. "Does positive CSR increase willingness to invest in a company based on performance? The incremental role of combined assurance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5631-5654, December.
    8. Alina HAGIU & Marinela BÃRBULESCU, 2022. "The Quality Of Corporate Governance In Romania," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 21(3), pages 97-106.
    9. Grosu, Veronica & Brinzaru, Simona-Maria & Ciubotariu, Marius-Sorin & Kicsi, Rozalia & Hlaciuc, Elena & Socoliuc, Marian, 2022. "Mapping Future Trends in Integrated Reporting, CSR and Business Sustainability Research: A Cluster-based Approach," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2022), Hybrid Conference, Opatija, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Hybrid Conference, Opatija, Croatia, 17-18 June 2022, pages 264-286, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    10. Patrick Velte, 2024. "Archival research on sustainability‐related executive compensation. A literature review of the status quo and future improvements," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3119-3147, July.
    11. 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.
    12. Charl de Villiers & Jing Jia & Zhongtian Li, 2022. "Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4523-4568, December.
    13. Barry Ackers & Adeyemi Adebayo, 2024. "The nexus between non‐governmental organisations involved in conservation and profit‐seeking state‐owned enterprises: A potential alternative credibility enhancing mechanism for biodiversity disclosur," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 2699-2714, July.
    14. Suman Devarapalli & Lalita Mohan Mohapatra, 2024. "Impact of Corporate Governance Characteristics on Integrated Reporting Quality: An Empirical Analysis, Evidence from India," Indian Journal of Corporate Governance, , vol. 17(1), pages 9-32, June.
    15. 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.
    16. Abdulaziz A. Alomran & Kholod F. Alsahali, 2023. "The Role of Long-Term Institutional Ownership in Sustainability Report Assurance: Global Evidence," Sustainability, MDPI, vol. 15(4), pages 1-17, February.

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