How does integrated reporting influence the transparency of companies in their external disclosures?

Details

Supervisors

Desmet, Carlos

Faculty

Louvain School of Management

Degree label

Master [120] en ingénieur de gestion

Abstract

Since the financial crisis of 2008, it has been crucial to reshape both economic and financial regimes with a view to re-establish confidence in a spirit of transparency. As a result, different types of regulations have emerged nationally, Europe-wide and on a global perspective, including standards, initiatives, guidelines and so forth. This Master Thesis falls within these regulations and, in particular, within the context of the integrated report. The analysis concerns the influence of the integrated reporting on the transparency of companies in their external disclosures. This paper highlights different regulations that are applied in the world today, the potential benefits of integrated reporting both from an internal and external point of view and ultimately the risks associated with the publication of this report. To conduct a qualitative assessment of the academic research, ten companies, including three investor-type ones, were interviewed to draw attention to the following findings. Perhaps the most telling result concerns the crucial lack of standardization between the various regulations: companies of a certain size are mandatory to report on non-financial information, though the form remains flexible. Consequently, the integrated report remains voluntary for European companies issuing it, and this may lead to various risks: for instance, selectivity concerns and greenwashing, both for the company itself and for its investors. Ultimately, the integrated report sounds like a valuable management tool in the long term, yet it is still in its early stages of application.