The Association of Chartered Certified Accountants, International Integrated Reporting Council, and the International Association for Accounting Education and Research have awarded three research projects to stimulate fresh insight on issues at the heart of integrated reporting.
The three projects are well underway and will be delivered this year.
The first of the three projects is Meeting users’ information needs: The use and usefulness of Integrated Reporting, led by Richard Slack (Reader in Accounting, Durham University, UK) and David Campbell (Professor in Accounting, Newcastle University, UK).
Slack and Campbell will examine the use and usefulness of integrated reporting to investors and capital market actors (brokers, fund managers, and analysts encompassing international equity markets) and other key finance and debt-related audiences (corporate financiers, corporate bankers, private equity). In doing so, the research will specifically examine, from a significant user perspective, the claimed benefits of integrated reporting to investors, with relevance to other key users, that:
- Integrated reporting makes the connections between organizations’ strategy, governance, performance, and prospects clearer—which allows investors to be able to assess more effectively the combined impact of a range of diverse factors;
- The disclosure of key risks and opportunities (as management views them) enables investors to assess their short-, medium-, and long-term impact; and
- More effective capital allocation decisions lead to better long-term investment returns.
The research will provide evidence as to the current level of familiarity with, and demand for, integrated reporting and the barriers that may impair such demand in capital markets.
Factors Affecting Preparers’ and Auditors’ Judgments about Materiality and Conciseness in Integrated Reporting is the second research piece and will explore the issues of materiality and conciseness in integrated reporting from the perspectives of financial reporting preparers, external auditors, and assurance providers. The study seeks to provide evidence that can be used to further promote the practice of integrated reporting. This project is led by Marvin Wee (Associate Professor, University of Western Australia), Ann Tarca (Winthrop Professor, Head of Discipline, Accounting and Finance, University of Western Australia), Walter Aerts (Full Professor, University of Antwerp), Penelope Pink (BDO Audit (Western Australia) Pty Ltd), and Lee Krug (Lecturer, University of Western Australia).
The third research project, An Examination of the Determinants of Integrated Reporting Existence and Quality and Their Implications for Future Standard Setters, is led by Jon D. Perkins (Assistant Professor of Accounting, Iowa State University, US) and Cynthia Jeffrey (Bandle Faculty Fellow in Accounting, Iowa State University, US).
This research aims to answer two primary research questions: What are the effects of organizational and environmental characteristics on firms’ decision to issue an integrated report? What are the effects of organizational and environmental characteristics on the quality of firms’ integrated reports? In addition, the research will assess the effect of the quality of firms’ integrated reports on firm performance, including trading volume and cost of capital.
These three research projects will be important to progressing integrated reporting further. We support the integrated reporting initiative and we want to see it flourishing and evolving to keep it responsive with the ever-changing business environment as it becomes increasingly important not only to the accounting and financial world but also to the wider business and global economy.
Research Insights is a new series that will be featured on the IFAC Global Knowledge Gateway. The series will present articles that briefly describe an academic research study, report, or project; and the significance it has for the global accounting profession. Please contact Christopher Arnold, Head of SME/SMP and Researcht at ChristopherArnold@ifac.org, to submit a Research Insight article for consideration.