The Development of Integrated Reporting and Concept Design for a Holistic Implementation: A Cross-Country Analysis of the Degree of Integrated Reporting in South Africa and Germany

Abstract

In corporate reporting, the density and complexity of information is constantly increasing. However, the relevance of information for the organisation's shareholders and stakeholders to make efficient decisions is also growing. Traditional corporate and financial reporting seems insufficient to adequately meet stakeholders' interests and needs since several shortcomings limit the reports' usefulness for decision-making.

These circumstances, extrinsic, and intrinsic motivating factors have led to Integrated Reporting maturing in the existing reporting landscape. At its core, Integrated Reporting aims to ensure holistic communication about an organisation's value creation, preservation, or erosion in the short, medium, and long term. It is important to emphasise how the strategy, governance, business model, performance, and prospects influence value transformation in the changing environment. Integrated Reporting thus combines financial and non-financial information. Therefore, it is considered as a possible approach to support the economy's sustainable development and meet the increasing demands on corporate reporting. Integrated Reporting can be seen as an advancement of prevailing reporting concepts and is regarded as a holistic approach to interdisciplinary and integrated corporate management.

The still relatively young research in Integrated Reporting is mainly reflected in analysing normative or conceptual issues on Integrated Reporting but less on its degree. In addition, existing research has focussed primarily on studying South African companies. Therefore, this dissertation attempts to close the accentuated research gap by conducting a cross-country analysis between South Africa and Germany. Compared to previous studies, this dissertation does not distinguish between self-declared adopters of Integrated Reporting and those who do not explicitly refer to the International Integrated Reporting Framework. In order to avoid the self-selection bias resulting from this binary approach, this thesis considers companies, regardless of their status, to fulfil the original intention of Integrated Reporting.

The dissertation examines the degree of Integrated Reporting and its corresponding development in a year-to-year comparison within a cross-country setting. Using a self-designed content analysis catalogue, the degree of Integrated Reporting is determined in South Africa and Germany. For this purpose, the Integrated Reporting score is also subdivided into different sub-scores based on the Content Elements of the International Integrated Reporting Framework. Various panel studies shed light on the development of Integrated Reporting from multiple perspectives.

The analysis results show that the companies increasingly report in a more integrated manner, regardless of their location. The findings also indicate that the orientation towards the aspects of Integrated Reporting is more pronounced in South Africa than in Germany. The degree of Integrated Reporting was also analysed along individual sub-scores, in analogy to the Content Elements of Integrated Reporting. The results of the sub-score analyses paint a similar picture to the overall assessment. The outcomes are supported by underlying theoretic assumptions and previous studies in similar constitutions. The findings from the analysis are used to make recommendations that enable Integrated Reporting to be implemented holistically in an organisation. This aligns with the Integrated Management Concept, which emphasises the necessity of a normative, strategic, and operational management level. Critical, overarching success factors are also identified in this context.

This research adds value to academia, practitioners, and standard setters by examining Integrated Reporting from multiple perspectives. On the one hand, this thesis analyses the development of Integrated Reporting in a mandatory and, on the other hand, in a voluntary environment. This leads to closing the identified research gap and actively contributes to answering the research questions. In addition, recommendations for action for the entire implementation of Integrated Reporting allow companies to transfer this approach to realise the potential benefits of Integrated Reporting.