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Market And Company Effects Of Voluntary Ir Adoption - A Questionable Topic In The Case Of European Companies

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  • Rareş HURGHIŞ

Abstract

The primary purpose of Integrated Reporting is to explain how an organization creates value over time to financial capital providers. Using shareholder theory lenses, this study explores the effects of voluntary adoption on the capital market and value of the company. Thus, is analyzed the relation between a self-constructed Disclosure Index Score (measuring the alignment degree of an integrated report with Framework) and analysts forecast error, respectively Tobin's Q. The analyzed sample is formed of 98 integrated reports produced by 61 European companies, published on IIRC website for 2013-2017 period. The results highlight that, as the analyzed report is more aligned with Framework, analysts forecast error increases while the value of the company decreases. Consequently, information disclosure in a voluntary setting, affects in a negative manner analyst forecast errors while the proprietary costs and competition sensitive information, exceed the benefits of adoption. The current study contributes to existing knowledge by exploring the voluntary adoption of integrated reporting using quantitative analysis and focusing on the European context.

Suggested Citation

  • Rareş HURGHIŞ, 2020. "Market And Company Effects Of Voluntary Ir Adoption - A Questionable Topic In The Case Of European Companies," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(22), pages 70-87.
    • Handle: RePEc:alu:journl:v:2:y:2020:i:22:p:70-87
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    More about this item

    Keywords

    integrated reporting; company value; analyst forecasts;
    All these keywords.

    JEL classification:

    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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