Companies the world over have implemented the new phenomenon of Integrated Reporting. This followed global initiatives introduced by the International Integrated Reporting Council (IIRC), and in Nigeria by the Integrated Reporting Council of Nigeria (IRCN). In Nigeria, it is mandatory for all listed non-financial firms on the Nigerian Stock Exchange to produce and publish annual Integrated Reports. This also aligns with the recommendations of the King IV Code of Corporate Governance. The major weakness of Integrated Reporting is that it is an expensive and time-consuming process, given that numerous resources go into its development and one report can exceed a hundred pages. However, its strength rests in the provision of a wholistic view of the company to its stakeholders.

In view of stakeholder requirements and benefits, the question that remains unanswered relates to whether there are financial benefits for companies that employ Integrated Reporting. Such an understanding is crucial as such information may inform companies considering its adoption. This study sought to determine whether Integrated Reporting had any impact on the financial performance of companies in Nigeria generally, and, in particular the Top 40 Nigerian Stock Exchange listed non-financial firms.

This study on Integrated Reporting was underpinned by the stakeholder theory. Company stakeholders are the primary audience of the Integrated Report. By adopting Integrated Reporting, a company becomes more mindful of its stakeholders as they influence the decision-making processes. Given the focus of the study on Integrated Reporting, the theory enables establishing whether or not Integrated Reporting reflects, offers and delivers all the financial and non-financial information required to stakeholders.

The study was located within a positivist paradigm, given that there was a distance between the researcher and the researched. The study commenced with hypotheses and employed statistical measurements for data analysis and presentation. Using a quantitative approach, data were drawn from the Nigerian Stock Exchange. In selecting the Top 40 listed non-financial firms based on market capitalization, the study employed statistical analysis to investigate the impact of Integrated Reporting on financial performance.

On the over all, this study found that companies did not benefit significantly from Integrated Reporting. The study found that Integrated Reporting has no impact on financial performance as there was no relationship between return on assets (ROA) and Economic Social Governance (ESG) score. It also emerged that there was no impact on financial performance as there was no relationship between Economic Value Added (EVA), Tobin Q and ESG. This suggests that companies may not be utilizing fully the synergies that come with the adoption of this reporting phenomenon. It may also be that Integrated Reporting is not assisting companies in generating any long-term value.

• Background to the study
In market-based economies, companies play pivotal roles as they contribute to economic growth, technological development and employment creation. To fulfil these roles, funds are required to benefit from productive assets. Debt and equity are the main sources of funds. Debt emanates from financial institutions and equity funding from shareholders or investors. Consequently, companies should provide their investors with adequate, appropriate and relevant information to be utilised in the analysis and assessment of past, present and future performance. The analysis and assessment are facilitated by the annual reports and these extend significantly in history. Over the decades however, significant changes have occurred in the financial reporting structure. These include traditional reporting and sustainability reporting.

Until the early 2000s, traditional reporting was the main form of reporting available and used to communicate with shareholders and investors. This form of reporting consisted mainly of financial information with a statement of financial position, statement of comprehensive income, statement of cashflows, statement of changes in equity, and the directors report. According to the International Integrated Reporting Council (IIRC) (IIRC, 2013), this kind of reporting however only gave a narrow account of the organisation, and the quality and level of the information provided in traditional reports was inadequate and mostly outdated. Often, these reports contained very little non-financial information and failed to communicate other relevant information that is deemed material in the analysis of companies (Dumay, Bernardi, Guthrie and Demartini, 2016). It also leaned quite closely to the agency theory (Owen, 2013), where boards and management would act as the agents and the investors and shareholders as the principals.

Subsequently, discussions by stakeholders on the reliability and relevance of traditional reporting as a foundation for decision-making, found that these reporting techniques were not providing a wholistic picture of the organisation (IIRC, 2013). This lack of wholistic structure resulted in a dire need for explaining the impact of organisations on other additional aspects such as the environment, society, and economy. There was increasing pressure to improve reporting and include non- financial information.

Consequently, sustainability reporting was born as companies started acknowledging accountability to the environment, economy and society (Global Reporting Initiative (GRI, 2011). This was also known as triple bottom line reporting or corporate social responsibility (GRI, 2017). These three aspects of the business influence a company’s future and performance (Struwig and Van Rensburg, 2016). These reports communicated and presented sustainability performance, impacts, values, governance as well as links between obligation and approach to a sustainable global economy (GRI, 2017). These reports were combined and put in a separate report (GRI, 2017).

However, as with traditional reporting, stakeholders continued to feel that there was still a shortfall in the information that was being provided. These separate reports tended to be cluttered, lengthy and difficult to comprehend (Zhou, Simnett and Green, 2017). Further, these sustainability reports did not provide a future outlook of the company, were disconnected from the financial reports and others considered them to be “a waste of a tree” (IIRC, 2013, Terry, 2012). Marx and Mohammadali-Haji (2014) stated that “traditional reporting” and “sustainability reporting” failed to link economic, social, and environmental issues within companies. This resulted in a clearly visible disconnection between non-financial and financial information made it problematic for stakeholders and investors to evaluate the past, present and future prospects of the companies. This gave rise to the launch of the Integrated Report in 2010 by the IIRC. IIRC views Integrated Reporting as a “concise communication on how an organisations strategy, governance, performance and prospects, in the context of external environment lead to the creation of value over short, medium and long term”

(IIRC, 2013:7). Following the IIRC in London, an Integrated Reporting Committee of Nigeria (IRCN) was launched in May 2010. This new method of reporting aggregates various organisational aspects by placing them into one report, thus providing a wholistic view of the company (Hoque, 2017). Following the introduction of this report, the IIRC gained immense support from influential groups such as financial watchdogs, global organisations, auditors and accountants such as Deloitte, Ernst and Young and the International Accounting Standards Board (IASB)(Dumay and Dai, 2017)

Nigeria was one of the forerunners in the implementation of integrated reporting (Mmako and van Rensburg, 2017). These authors also indicate that the King Code of Corporate Governance calls for companies to produce integrated reports. The requirements of the King Code and the Nigerian Stock Exchange (NSE) are linked. While the NSE has been “silent” on its requirements for an integrated report, one of its listing requirements is application of the King Code which recommends that companies produce integrated reports. Thus, all NSE listed non-financial firms are required to produce integrated reports. This requirement is not a legislated requirement, and, as such, unlisted non-financial firms in Nigeria do not produce integrated reports (Mmako and van Rensburg, 2017).

As the largest stock exchange in the African continent, NSE is ranked number 61 by the World Economic Forum (Schwab, 2018). It is one of the most competitive and strongest exchanges in Sub-Saharan Africa (Schwab, 2018), hence establishing the effects of integrated reporting on financial performance is essential, especially to the investing public and stakeholders. Because of the listing requirements as stated above, all listed non-financial firms have been producing integrated reports, but they started at different times. Some Nigerian companies on the NSE participated in the pilot phase in 2010 while others started as late as 2014.

The IIRC developed a structure, to provide guidelines and components that constitute the Integrated Report (IIRC, 2013). The document also established primary users of this wholistic report that integrated reporting benefits for all company stakeholders, among others, staff, clients, contractors, stockholders, and local groups (IIRC, 2013). The framework is principles-driven and entirely optional (IIRC, 2013). Thus, this allows elasticity and prescription for the wide variety of companies. There is a significant amount of judgment to be considered in preparing the integrated report, which includes detail about matters that affect organisations substantively and their value creation ability over time (IIRC, 2013). In applying the framework, companies should consider compliance with the framework and understand their own intentions and what they seek to achieve by producing an integrated report (IRCN, 2014).

Some benefits of the integrated report have been highlighted as: increased competitive advantage, improving management strategic decision-making, promoting company performance, and enhancing its reputation (Hoque, 2017). The production of the integrated report is however time-consuming, expensive, and cumbersome (Surty, Yaseen and Padia, 2018). Nonetheless, NSE listed non-financial firms are compelled to produce these reports. Furthermore, the production of integrated reports has caused organisational conflicts with regards to the content to be included in the reports (Suttipun, 2017).

Hoque (2017), Mmako and van Rensburg (2017), Marx and Mohammadali-Haji (2014) and Rensburg and Botha (2014) considered the advantages, successes, and accessibility of integrated reporting and found that integrated reporting has succeeded internationally even though it is still a new concept where significant benefits may be recognised with time if practiced by all possible stakeholders.

Zhou et al. (2017), Magara, Aminga and Momanyi (2015), Churet and Eccles (2014), Qiu, Shaukat and Tharyan (2016) and Adediran and Alade (2013) focused their studies on the integrated reporting benefits and influence on company financial performance internationally, regionally in Kenya and Nigeria, and locally. These studies found that integrated reporting positively impacts a company’s financial performance. This is through lower cost of capital, lower risk, increased profits and share prices, and attraction of more investment.

• Problem Statement
The importance and reliability of annual reports has recently come into the limelight with several corporate scandals taking place. Users of financial reports and statements have argued that the current form of traditional reporting does not provide a full view and future outlook of a company and does not show overall strategy (Marx and Mohammadali-Haji, 2014). In other words, even though the GRI introduced Sustainability reporting, there still seemed to be an information asymmetry between the type of information stakeholders required or expected to see and what companies were providing them.

Hence integrated reporting needs to incorporate this wholistic view of the company, providing stakeholders with the financial and non-financial information that they may require.

The production of the integrated report is however time-consuming, expensive, and cumbersome (Surty et al., 2018, Cosma et al., 2018, Innovation, 2016, Hubbard, 2014). A single integrated report could easily be a minimum of 80 pages. NSE listed non-financial firms are being forced to produce these reports. Further it has caused organisational conflicts with regards to the content to be included in the reports. Against this background, this research seeks to establish how integrated reporting influences company financial performance.

Limited comprehensive academic work has been carried out in Nigeria; this is notwithstanding that this country was a forerunner in adopting Integrated Reporting. Earlier studies by Marx and Mohammadali-Haji (2014), Adediran and Alade (2013), and Rensburg and Botha (2014) have focused on environmental and sustainability reporting as well as practices of integrated reporting. Apparently, no research focused exclusively on how integrated reporting impacts company financial performance in Nigeria.

• Aim of the study
Non-financial benefits of integrated reporting have been identified, however not much has been said about the financial benefits. This study seeks to investigate whether integrated reporting has an impact on the financial performance on NSE listed non-financial firms.

• Objectives
The study seeks to investigate the impact of integrated reporting on company financial performance. This objective is sub-divided into two research objectives:

• Determine the impact of integrated reporting on financial performance.

• Establish the relationship between integrated reporting and firm performance.

• Research Questions
In addressing the above research objectives, the study answers the following research questions:

• Does integrated reporting impact a company’s financial performance through the accounting-based measures?

• Does integrated reporting impact a company’s financial performance through the market-based measures?

• What is the relationship between integrated reporting and firm performance?

• Significance of the Study
A few studies have been carried out internationally (Smith, 2016, Churet and Eccles, 2014), and nationally (Zhou et al., 2017, Mmako and van Rensburg, 2017, Marx and Mohammadali-Haji, 2014) on some aspects of integrated reporting for example, trends in integrated reporting, integrated reporting and capital markets. There seems to be no comprehensive study that has been carried out in Nigeria, on how integrated reporting impacts the financial performance of the Top 40 NSE listed non-financial firms. Thus, this study seeks to contribute to this literature gap with respect to integrated reporting in Nigeria. The study will establish whether its influence on the elements being tested in the hypothesis is an additional advantage of adopting integrated reporting practice.

If this study is published, beneficiaries from findings and recommendations would include accountants, companies, integrated reporting consultants and agencies. Consequently, companies that have benefited from adoption of integrated reporting potentially could encourage other companies to adopt and realise these benefits, regardless of whether they are listed or not, thus supporting the institutional theory.

With the changes in the accounting curriculum, financial accounting academics and students could also draw some benefits from this study by using it as a reference point. In addition, researchers may also be able to identify areas for further research, thereby benefiting from this study.

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