Management of risks associated with the disclosure of future-oriented information in integrated reports

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dc.contributor.author Lakshan, AMI
dc.contributor.author Low, Mary
dc.contributor.author de Villiers, Charl
dc.date.accessioned 2021-05-16T21:40:24Z
dc.date.available 2021-05-16T21:40:24Z
dc.date.issued 2021-1-26
dc.identifier.citation Sustainability Accounting Management and Policy Journal 12(2):241-266 06 Jan 2021
dc.identifier.issn 2040-8021
dc.identifier.uri https://hdl.handle.net/2292/55094
dc.description.abstract <jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>Integrated reporting (IR) promotes the disclosure of future-oriented information to enable financial stakeholders to make better-informed decisions. However, the downside to this type of disclosure is the risk to management of disclosing such future-oriented information. This paper aims to explore how IR preparers manage the risk of disclosing future-oriented information in companies’ integrated reports.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>This study represents an exploratory interpretative thematic analysis of 33 semi-structured interviews with managers involved in IR in eight Sri Lankan companies representing various industries. The thematic analysis is informed by the research literature and prior studies on IR.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>This paper provides evidence of various strategies to manage the risk associated with the disclosure of future-oriented information in integrated reports. These strategies include making non-specific predictions; increasing the accuracy of the predictions; linking performance management to disclosed targets, thus ensuring individual responsibility for target achievement; disclosing <jats:italic>ex post</jats:italic> explanations for not achieving previously disclosed targets; and linking disclosed targets to the company’s risk management procedures. However, these strategies can cause managers to provide conservative future-oriented information, rather than “best estimate” future-oriented information.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Practical implications</jats:title> <jats:p>The study describes the strategies that managers use to mitigate the risks involved in disclosing future-oriented information. These strategies can provide support or raise concerns, for managers in deciding how to deal with such risks. Regulators tasked with investor protection, as well as stock exchanges interested in the transparency and accountability of listed companies’ activities should be aware of these strategies. Furthermore, the International Integrated Reporting Council (IIRC) should be interested in the implications of this study because some of the identified strategies could undermine the usefulness of integrated reports to stakeholders. This is a significant concern given that the IIRC envisages integrated reporting and thinking as vehicles that could align capital allocation and corporate behaviour with wider sustainable development goals.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Social implications</jats:title> <jats:p>The trend of future-oriented information moving from being used only in organisations’ internal management systems to being externally reported in integrated reports has implications for stakeholder groups interested in the reported targets. This study reveals management strategies that could affect future-oriented information reliability and reduce their usefulness for users of integrated reports.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>This study provides unique insights into the emerging area of how managers deal with the risks involved in disclosing future-oriented IR information.</jats:p> </jats:sec>
dc.language en
dc.publisher Emerald
dc.relation.ispartofseries Sustainability Accounting Management and Policy Journal
dc.rights Items in ResearchSpace are protected by copyright, with all rights reserved, unless otherwise indicated. Previously published items are made available in accordance with the copyright policy of the publisher.
dc.rights © Emerald Publishing Limited. This AAM is provided for your own personal use only. It may not be used for resale, reprinting, systematic distribution, emailing, or for any other commercial purpose without the permission of the publisher
dc.rights.uri https://researchspace.auckland.ac.nz/docs/uoa-docs/rights.htm
dc.rights.uri https://www.emeraldgrouppublishing.com/our-services/authors/author-policies/author-rights
dc.subject Social Sciences
dc.subject Science & Technology
dc.subject Life Sciences & Biomedicine
dc.subject Business, Finance
dc.subject Green & Sustainable Science & Technology
dc.subject Environmental Studies
dc.subject Management
dc.subject Business & Economics
dc.subject Science & Technology - Other Topics
dc.subject Environmental Sciences & Ecology
dc.subject Risk and uncertainty
dc.subject Integrated reports
dc.subject Future-oriented disclosure
dc.subject 14 Economics
dc.subject 15 Commerce, Management, Tourism and Services
dc.subject 16 Studies in Human Society
dc.title Management of risks associated with the disclosure of future-oriented information in integrated reports
dc.type Journal Article
dc.identifier.doi 10.1108/sampj-03-2019-0114
pubs.issue 2
pubs.begin-page 241
pubs.volume 12
dc.date.updated 2021-04-27T21:57:35Z
dc.rights.holder Copyright: Emerald Publishing Limited en
pubs.author-url http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000607811500001&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=6e41486220adb198d0efde5a3b153e7d
pubs.end-page 266
pubs.publication-status Published
dc.rights.accessrights http://purl.org/eprint/accessRights/OpenAccess en
pubs.subtype Article
pubs.subtype Journal
pubs.elements-id 836527
dc.identifier.eissn 2040-803X


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