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Integrated Reporting

Useful for investors?


Stefan Hannen

The introduction of Integrated Reporting (IR) is supposed to tackle shortcomings of corporate reporting that have been criticized for decades. The new reporting format intends to improve the understandability of corporate reports and broaden their often merely financial and backward-looking perspective. This study investigates the usefulness of IR for investors. A conceptual analysis provides an in-depth examination of the IIRC’s International Framework, the basis to prepare integrated reports. An empirical analysis examines the presence of IR in existing reports from South Africa and the USA, before testing potential consequences for the capital market. The findings have implications not only for investors, but also for the reporting firms, regulators and academics.

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2 The Integrated Reporting approach


2    The Integrated Reporting approach

This chapter deals with the approach of IR. The first section sheds light on where IR comes from and how it developed. Both the young history of the IR movement16 and the institutions that played or still play a role in its advancement are introduced, with particular focus on the IIRC and the development of the International Framework as the main output of the Council’s work. The second section describes this Framework. A critical discussion of the regulations follows in the third section.

2.1      History and institutional background

Various movements in corporate reporting already dealt with different inadequacies of corporate reporting and with reporting topics outside the focus of traditional (financial) reports. These movements laid the foundation for IR. However, it was the formation of the IIRC that brought together different approaches and topics for a joint proceeding toward IR and a common Framework.

The background of Integrated Reporting

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