The association between integrated thinking and corporate reporting quality

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This study examines the relationship between integrated thinking and corporate reporting quality. Specifically, by means of agency and stakeholder theory, it is examined whether integrated thinking implementation fulfills the need for information asymmetry reduction and increased stakeholder focus. Moreover, this study looks into whether integrated thinking might increase the voluntary disclosure of higher quality information. Corporate reporting quality is measured by means of financial and nonfinancial reporting quality proxies. This study explores potential moderating effects of characteristics of the board of directors, such as its size, independence and gender diversity, and the audit committee, such as its expertise and independence. Using a sample of 100 European organizations for the period of 2009-2019, the results indicate that integrated thinking has a positive effect on financial reporting quality, but not on corporate and non-financial reporting quality. Additionally, board size, board independence, board gender diversity, audit committee expertise and audit committee independence all are shown to have either short or long term positive moderating effects on the association between integrated thinking and reporting quality. The findings are useful for stakeholders, regulators and standard setters, as an increased focus on these internal assurance mechanisms could lead to enhanced integrated thinking and reporting quality.
Faculteit der Managementwetenschappen