Firm Value and Integrated Reporting Quality of South African Listed Firms
Tankiso Moloi, Oluwamayowa Iredele
Integrated reporting is mandatory for companies listed on the Johannesburg Stock Exchange (JSE). Despite this requirement, companies still exercise discretion about what to disclose, and this gives rise to variation in quality of integrated reports released by these companies. Given the relevance of quality integrated reports to providers of capitals and the associated economic benefits, empirical study of this nature becomes necessary to establish this link in the South African context. The paper examines the value relevance of integrated reporting quality (IRQ) of South African listed firms. Specifically, if any difference exists in the value of firms with high IRQ and those with low IRQ. Integrated reporting began in South Africa, and the country has equally contributed significantly to its development worldwide. JSE listed companies that have been made to adopt this reporting system on “apply and explain” basis provides the setting for this study. The study utilises data for a sample comprising 100 firms -year observation of 20 firms listed on the JSE between 2013 and 2017. The variables used to determine IRQ were based on Ernst and Young Excellence in Integrated Reporting Awards annual rating. Other variable in the study includes Tobin’s Q as a measure of firm value. Data analysis involves descriptive statistics and independent sample t-test with the aid of IBM SPSS version 21. We find that there is a statistical significant difference (P < 0.10) in firm value on the account of difference in integrated reporting quality. This signals the value adding effect of IRQ.