Theories on Integrated Reporting

Theories on Integrated Reporting

Copyright: © 2018 |Pages: 6
DOI: 10.4018/978-1-5225-3622-2.ch004


This chapter seeks to explain the main theories used for studying integrated reporting. Scholars and academics conducted research on non-financial information (investigating environmental/social/governance reports), and even on integrated reports (still few studies in this field) involving a set of theories: institutional and neo-institutional theory, legitimacy theory, positive accounting theory, agency theory, accounting constellation theory, etc.
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Jackson and Apostolakou (2010), Matten and Moon (2008), Granovetter (2000), Granovetter (1985), and Ball et al., (2010) use institutional theory or neo-institutional theory in their research to prove that institutions of economic, cultural, educational, financial, and political nature maintain a significant influence upon worldwide organizations. Jensen and Berg (2011) conduct an empirical research upon 309 corporations selected from various sources, namely GRI reports list, GRI dataset with best traditional sustainability reports, CRRA Reporting Award 2010, Eccles & et al. (2010b). Results show that integrated reporting is highly correlated with the stage of economic development, national corporate responsibility, countries’ values system, trade unions, private expenditure of tertiary education, ownership dispersion. The authors failed to prove the influence of the political factor, underlining the inconsistency of data regarding the years for which information has been collected, given the fact that the analysis does not consider the presumption of major changes in the political system. Finally, we consider that the institutional theory can be successfully introduced in a research paper aiming to find the determinants of integrated reporting. The relevance of this paper for our research resides in the fact that Aceituno et al. (2012) use the coercive and normative approaches of the IT isomorphism (from the three dimensions of coercive, mimetic, and normative). We apply the segment of mimetic isomorphism of IT in our own research. The mimetic isomorphism refers to engagement in reporting practices because other companies did this before and are considered as models. Coercive isomorphism means to act in a certain manner as a result of rules expressed by external forces (Othman et al., 2011). Normative isomorphism assumes doing what is considered to be right from a professional point of view, e.g. countries based on a civil law policy are more stakeholder oriented than those that practice common law and focus on shareholders mostly (Aceituno et al., 2012).

We can add the legitimacy theory on the IR theories’ list, especially from the perspective of stakeholders’ legitimacy (Bebbington et al., 2014; De Villiers et al., 2006). Carnegie and Napier (2010) explain the relevance of the legitimacy theory in connection to stakeholders’ needs and expectations, as not only investors are affected by the activity of the organization, because the main client of the company is the “society as a whole” (Carnegie & Napier, 2010: 20; Barone et al., 2013; De Villiers et al., 2006).

The diffusion and adoption theory for organizational practices (Jensen & Berg, 2012; Dillard et al., 2004) originated from the institutional theory, as the latter states the influence of certain factors in the practices adopted by corporations (Jackson & Apostolakou, 2010; Matten & Moon, 2008).

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