Is Integrated Reporting still relevant for the capital markets? Evidence from a voluntary setting—The case of environmental and social sensitive European companies

• Published in: Corporate social-responsibility and environmental management 2024-11
• Main Authors: Hurghiș, Rareș, Tiron‐Tudor, Adriana, Topor, Dan Ioan
• Format: Article
• Language: English
• ISSN: 1535-3958; 1535-3966
• DOI: 10.1002/csr.3049

Over the past two decades, Integrated Reporting (IR) has evolved into a consolidated global corporate reporting practice, used by financial analyst in evaluating companies. Considering the existing strong regulations on nonfinancial reporting for European companies, current study analyses the impact of voluntary IR adoption and implementation on the European capital markets, exploring also the presentation of which dimensions from the IR Framework have the highest impact on analyst forecasts. The study uses a balanced panel sample formed of 420 integrated reports for the 2013–2022 period issued by publicly listed environmental and social sensitive European companies from the IR Examples Database. IR adoption and implementation is measured through a previously validated Alignment Index Score. The results highlight that IR partially reduces the analyst forecast errors, the disclosed information on company governance, strategy and resource allocation being the most relevant elements for the analysts. Thus, IR remains partially relevant for European capital markets. Current research enriches existing knowledge by analysing the market‐level effects of IR adoption and implementation in a voluntary setting, focussing on sensitive industries. To the author's knowledge, this study examines the effects of IR over the longest duration, spanning from 2013 to 2022.