The impact of integrated reporting on firm value and performance : evidence from Egypt

Abstract EN

The dynamic and increasing evolution of economic conditions emphasizes the potential deficiencies of historical information of listed companies because it cannot satisfy investors', diversified information needs along with economic development.

In some cases, historical information is unable to provide stakeholders with sufficient insight regarding critical success factors, opportunities, risks and management plans more integratA new reporting framework called integrated reporting had been raised during the last decade.

The United States Securities and Exchange Commission (SEC) initiated the concept of the integrated reporting in 1970s.

It calls for a single report that integrate the financial and the nonfinancial information.

The new reporting framework tries to improve the ability of the investors for assessing the future prospects of the firm and to remedy the shortcomings of the traditional reporting model of accounting.

the International Integrated Reporting Council (IIRC) is the main body behind the spread of the integrated reporting idea.

The council issued a framework that included the main components of the integrated report components and requirements of implementation.

The components of the integrated report included six forms of capital (natural capital, social and relationship, human, intellectual, manufactures and financial) that help in creating a future value for the firm using the business model and organization's strategyThe purpose of this paper is to identify key challenges, opportunities, strengths and weaknesses to be experienced by companies listed in the stock exchange market (EGX30) within the integrated reporting (IR) implementation process.

The research also, test the link between the level of compliance to IR and the firm performance and value.

The researcher used the profitability (ROE) and leverage level (Debt ratio) as proxies for firm performance and the capitalized market value for the firm value.

In addition, the researcher constructed an index for the IR implementation level through scanning the IIRC framework issued by the International Integrated Reporting Council (IIRC), along with the integrated reports issued by the international companies in 2016 and 2017 in accordance to the requirements of the council.

The study used data from the companies listed in EGX30 index in the Egyptian stock exchange market through the period 2012 to 2017.

The data collected through the annual reports of the companies were analyzed through group of statistical analysis like; Descriptive analysis, Pearson correlation, regression analysis.

The findings of the research were supporting the positive correlation between the level of IR compliance and firm performance and value and the leverage level of the companies.

The results suggest that the implementation of the integrated reporting will enhance the companies' performance and value in the Egyptian stock exchange market.

Up to the knowledge of the researcher the mentioned variables have not been investigated in the Egyptian market.

The research provided insights into the future of implementing the (IR) reporting which can be used as a base for further researches in Egypt.