The association between voluntary integrated reporting and firm value of European listed companies
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2021-11-22
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en
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Abstract
In response to a call for improved transparency and sustainable value creation from investors and other stakeholders, companies are increasingly adopting integrated reporting (<IR>). However, the number of companies issuing integrated reports (IRs) pales in comparison to the number of companies disclosing separate ESG information. This study investigates the extent to which voluntary <IR> positively affects firm value and aims to determine the effects of integrated reporting quality (IRQ) on firm value, because such a relationship is expected to incentivize companies to start adopting <IR> and thus creating value in a more sustainable manner. By utilizing a panel data set of the 600 companies listed on the STOXX600 Europe index for a 2013 to 2020 timeframe and performing multiple GLS regressions, this study finds an insignificant negative relationship between <IR> and firm value. Furthermore, this study measures the relationship between IRQ and firm value using a sub-sample of 495 firm-year observations for 72 listed companies which issued an IR during the 2013 to 2020 timeframe. Firm value is measured using Tobin’s Q and IRQ is measured by combining four ESG items from the Refinitiv ESG database. According to the findings of this study, IRQ has an insignificant positive effect on firm value. This study also reveals the relationship between firm value and <IR> to be insignificantly positive for companies listed in shareholder-oriented countries and significantly negative for companies listed in stakeholder-oriented countries. However, this study suffers from certain limitations regarding the measurement of IRQ.
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Faculteit der Managementwetenschappen