FIRMS’ CHARACTERISTICS AND INTEGRATED REPORTING: EVIDENCE FROM SRI LANKA

Abstract

Integrated Reporting (IR) has become a new reporting dimension in current financial reporting arena. Recently most of the companies around the world have adopted IR concept which some far beyond the sustainability reporting in their financial statements. Since IR is not yet mandatory requirement in Sri Lanka, companies adopt IR for their reporting in various levels with the assistance of Integrated Reporting Framework guidelines given by the International Integrated Reporting Council (IIRC). Therefore, this study focuses to investigate whether firms’ characteristics determine the level of IR adoption in companies listed in Colombo Stock Exchange (CSE). Objectives of this study were to analyze the level of IR adoption, examine the impact of Firms’ characteristics on level of IR adoption. For this study, all IR adopted companies were selected as the sample. It was revealed that 61 companies have adopted IR for their reporting by 2016. Data was collected for the years 2016 and 2017 using annual reports of selected companies. Level of IR adoption was used as the dependent variable while structure related, performance related and market-related firms’ characteristics of a firm were selected as independent variables. Structure related variables are firm’s listed age, leverage and ownership dispersion. As the performance related variables, profitability, assets and total sales were considered. Market value, audit firm size and industry type were selected as market related variables. Regression analysis was employed to analyze the impact of firms’ characteristics on level of IR adoption. Findings revealed that there is a significant impact of Firms’ Age, Leverage, Ownership Dispersion, Total Assets, Total Sales and Industry type on level of IR adoption.