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The trend of integrated reporting practice in South Africa: ceremonial or substantive?

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  • Abdifatah Ahmed Haji
  • Mutalib Anifowose

Abstract

Purpose - The purpose of this paper is to examine the trend of integrated reporting (IR) practice following the introduction of an “apply or explain” IR requirement in South Africa. In particular, the authors examine whether the IR practice is ceremonial or substantive in the context of a soft regulatory environment. Design/methodology/approach - By way of content analyses, the authors examine the extent and quality of IR practice using an IR checklist developed based on normative understanding of existing IR guidelines. The evidence is drawn from 246 integrated reports of large South African companies over a three-year period (2011-2013), following the introduction of IR requirement in South Africa. Findings - The results show a significant increase in the extent and quality of IR practice. The findings also reveal significant improvements in individual IR categories such as connectivity of information, materiality determination process and reliability and completeness of the integrated reports. However, despite the increasing trend and evidence of both symbolic and substantive IR practice, the authors conclude that the current IR practice is largely ceremonial in nature, produced to acquire organisational legitimacy. Practical implications - For academics, the authors argue that there is a need to move away from the “what” and “why” aspects of the IR agenda to “how” IR should work inside organisations. In particular, academics should engage with firms through interventionist research to help firms implement integrated thinking and substantive reporting practices. For organisations, the findings draw attention to specific aspects of IR that require improvement. For policymakers, the study provides evidence based on the developmental stage of IR practice and draws attention to certain areas that need clarification. In particular, the International Integrated Reporting Council and Integrated Reporting Committee of South Africa should provide detailed guidelines on connectivity of information, material issues and disclosure of multiple capitals and their trade-offs. Finally, for educators, in line with the ACCA’s embedment of IR in its accounting courses, there is a need to incorporate IR in the curriculum; in particular, the authors argue that the best way to advance IR is in a “ubiquitous” spread in accounting and management courses. Originality/value - This study provides empirical account of IR practice over time in the context of a regulatory IR environment. The construction of an IR checklist developed based on normative understanding of local and international IR guidelines is another novel approach of this study.

Suggested Citation

  • Abdifatah Ahmed Haji & Mutalib Anifowose, 2016. "The trend of integrated reporting practice in South Africa: ceremonial or substantive?," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 7(2), pages 190-224, May.
  • Handle: RePEc:eme:sampjp:sampj-11-2015-0106
    DOI: 10.1108/SAMPJ-11-2015-0106
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    Citations

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    Cited by:

    1. Amir Hossain & Sudipta Bose & Abul Shamsuddin, 2023. "Diffusion of integrated reporting, insights and potential avenues for future research," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2503-2555, June.
    2. Dimos Andronoudis & Diogenis Baboukardos & Fanis Tsoligkas, 2024. "How the information content of integrated reporting flows into the stock market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 1057-1078, January.
    3. Ahmed Aboud & Ahmed Saleh & Yasser Eliwa, 2024. "Does mandating ESG reporting reduce ESG decoupling? Evidence from the European Union's Directive 2014/95," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1305-1320, February.
    4. Nuradhi Kalpani Jayasiri & Sriyalatha Kumarasinghe & Rakesh Pandey, 2023. "12 years of integrated reporting: A review of research," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2187-2243, June.
    5. Diogenis Baboukardos & Anastasia Kopita & Charlotte Ranegaard & Elias Demetriades, 2024. "Carbon reporting regulation: Real effects, external pressures, and internal policies," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4871-4886, July.
    6. Roslyn Roberts & Daun Jang & Grace Mubako, 2023. "Pandemic risk disclosure in integrated reports: after COVID‐19 is hindsight 2020?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 1739-1758, June.
    7. Dimos Andronoudis & Diogenis Baboukardos & Fanis Tsoligkas, 2024. "How the information content of integrated reporting flows into the stock market," Post-Print hal-04389552, HAL.
    8. Roszkowska-Menkes, Maria & Aluchna, Maria & Kamiński, Bogumił, 2024. "True transparency or mere decoupling? The study of selective disclosure in sustainability reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 98(C).

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