Integrated Reporting (eBook)

Chiara Mio is a Professor at Ca’ Foscari University, Venice, Italy. Professor Mio teaches corporate reporting, management control in international firms and sustainability management. She is the chair of the board at FriulAdria Bank, Italy, and she is chair of ESG (environmental social governance) Reporting Task Force at FEE (Fédérations des Experts-Comptables Européens, Belgium). Her research interests include sustainability, management accounting and integrated reporting. She has previously published Towards a Sustainable University: The Ca’Foscari Experience with Palgrave Macmillan (2012).

Foreword 6
Preface 14
Contents 18
Notes on Contributors 22
List of Figures 26
List of Tables 28
1: Integrated Reporting: The IIRC Framework 30
Introduction 31
IIRC Guiding Principles and Content Elements 34
Guiding Principles and Content Elements: An IR Implementation Perspective 40
GRI Guidelines and IIRC Framework: A Comparison 41
Stakeholder Relationships 41
Materiality 42
Comparability 43
Connectivity of Information 44
Reliability and Conciseness 44
Conclusions 46
References 47
2: Strategy and Business Model in Integrated Reporting 48
Introduction 49
Strategy and Business Model Reporting in the International IR Framework 50
Strategy, Strategic Objectives and Strategic Focus in IR 50
The Business Model in IR 52
Strategy 53
Business Model 54
What Is a Business Model? What Is Its Function? 55
What Are the Business Model’s Components? 55
How a Business Model Relates with Strategy? 56
Examples 57
British American Tobacco 58
Eni 59
Iberdrola 61
Sage 63
Conclusions 64
References 65
3: Value Creation: A Core Concept of Integrated Reporting 66
Introduction 67
The Concept of ‘Value’ in General 67
The Concept of ‘Value’ Applied in Business 69
The Concept of Value in the IIRC’s Framework 72
The Capitals: Major Value Components 75
The IIRC’s Value Concept: A Move to Change Business Behavior 79
References 82
4: Empirical Evidence on Current Integrated Reporting Practices 87
Critical Issues and Theoretical Background 88
Sample and Methodology 91
Overall Findings 93
Content Elements and Capitals: Analysis of Empirical Results 95
Compliance Score and Conciseness Index per Region 101
Conclusions 103
References 106
5: Integrated Reporting: Precursor of a Paradigm Shift in Corporate Reporting? 108
Introduction 109
Exploring Kuhnian Paradigm in Corporate Reporting 111
The Genesis of Integrated Reporting 111
Kuhnian Definition of Paradigm 112
Methods 114
Competing Paradigms in Corporate Reporting 120
Unpacking the Disciplinary Matrix of Integrated Reporting 120
Incommensurability of Integrated Reporting with Sustainability Reporting 123
Commensurability of Integrated Reporting with Financial Reporting 127
Final Remarks: Paradigm Shift in Corporate Reporting? 129
References 131
6: Integrated Reporting: When, Why and How Did It Happen? 136
Introduction 137
SASB 139
First IFRS & GRI Dialogue in Latin America
Considering That All Companies Do Prepare Annual Financial Reports and Most of Them Also Prepare Sustainability Reports, Is There a Real Need for Integrated Reports? 140
One Word About IFRS & GRI Dialogue in Latin America
IIRC 142
Reference 143
7: Integrated Report: The Cases of Itaú Unibanco Holding S/A and of Natura Cosméticos S/A 144
Introduction 145
Itaú Unibanco Case 146
Brief History 146
Areas of Coverage 146
Business Activities 146
Institutional Culture 148
Adherence of Itaú Unibanco to Integrated Reporting 149
Awards Won for the Bank’s Integrated Report 153
Results Achieved from the Publication of Its Integrated Report 153
Improvements and Future Targets to Be Pursued 155
The Natura Case 156
Brief History 156
Areas Covered 156
Financial Profile 156
Institutional Culture 157
Adhesion to Integrated Reporting 158
Development of the Integrated Report 159
The 2014 Integrated Report 160
Content of the 2014 Report 160
Conclusions 163
Reference 165
8: The Influence of Institutional Investors on Companies’ Disclosure 166
Introduction 167
Background 168
Institutional Investors 168
Institutional Investors and Disclosure Quality 170
Institutional Investors and Integrated Reporting 171
Hypotheses Development 172
Methodology 174
Results and Discussion 174
Conclusion 178
References 179
9: The Influence of Corporate Governance on the Adoption of The Integrated Report: A first Study on IIRC Pilot Programme 181
Introduction 182
Voluntary Disclosure and Integrated Report 184
The IR Pilot Program 188
The Influence of Corporate Governance Structures on Disclosure 191
Size of the Board 192
The Activity of the Board 192
Gender Diversity 193
The Role of Non-executive Within the Board 194
The Presence of Blockholders 194
Methodology and Data 195
Discussion of Results 196
Summary and Conclusions 200
References 201
10: Institutional Determinants of IR Disclosure Quality 206
Introduction 207
Literature Review on the Determinants of IR 208
Hypothesis Development 212
Legal System 213
Financial System 214
Educational and Labor System 215
Cultural System 215
Economic System 216
Sample and Methodology 216
Results and Discussion 221
Legal System 222
Financial System 222
Educational and Labor System 223
Cultural System 224
Economic System 224
Conclusions 225
References 225
11: Enterprise Risk Management and Integrated Reporting: Is There a Synergism? 229
Introduction 230
Looking at Corporate Risks in an Integrated Way: The Enterprise Risk Management (ERM) 230
The Evidence of ERM Need 230
The Role Played by Recent Regulation 232
Existing Studies About ERM 233
ERM Applied Approach 234
ERM E IR: Is There Any Relation? 237
Purpose of the Analysis 237
Dataset 237
Analysis 239
First Part: Information Contained in IR 239
Second Part: Risk, Risk Management and ERM 241
Conclusions 252
References 252
12: The Integrated Reporting and the Conference Calls Content 255
The Disclosure to the Financial Markets: Role and Features of Conference Calls 256
The Conference Calls for the Financial Markets 256
The Conference Calls and Their Content 258
Levels of IR Adoption and Conference Call Contents 259
The Selected IR Adopters 259
The Integrated Content of the Conference Calls 261
The ESG Investor Briefing Project 261
The IR Reporters’ Conference Calls 263
The Integrated Disclosure in the Earnings Conference Calls 264
The Tone of the Disclosure 266
The disclosure in the Q& A session
References 273
13: The Relationship Between Integrated Reporting and Cost of Capital 277
Introduction 277
The Impact of Information Asymmetry on the Cost of Capital 279
Transparency, Integrated Reporting and Information Asymmetry 281
Sustainability, Integrated Reporting and the Cost of Capital 283
Final Remarks 288
References 290
14: Assurance and Other Credibility Enhancing Mechanisms for Integrated Reporting 293
Introduction 294
The Consideration of IR Assurance in the 2013 IIRC Consultation Draft Process 295
The 2014 IIRC Assurance Consultation Process 297
Feedback from IIRC 2014 Assurance Consultation Process 299
IAASB Working Group 302
Alternative Credibility-Enhancing Mechanisms for the Integrated Report 303
Research Opportunities 306
Drivers and Benefits of Independent Assurance and Other Credibility-Enhancing Mechanisms 306
Informing the Development of Assurance Standards and Guidance and Constructing Assurance Engagements 307
Discussion and Conclusion 307
References 308
15: IR: The Big Promise and the Expectation Gap 311
Introduction 312
Methodology 313
Companies 314
Motivations and Expectations Towards IR 314
The IR Implementation Process 316
IR Adoption Consequences 318
Investors 319
Discussion and Conclusion 320
References 323
Index 325