Integrated reporting and agency costs : International evidence from voluntary adopters

Journal article


Obeng, Victoria A., Ahmed, Kamran and Cahan, Steven F.. (2021). Integrated reporting and agency costs : International evidence from voluntary adopters. European Accounting Review. 30(4), pp. 645-674. https://doi.org/10.1080/09638180.2020.1805342
AuthorsObeng, Victoria A., Ahmed, Kamran and Cahan, Steven F.
Abstract

We examine whether the practice of integrated reporting (IR) can reduce agency problems between managers and investors, resulting in lower agency costs. We construct a sample of firms that voluntarily use IR in practice, drawn from 35 countries, and find that firms that apply IR practice more extensively (high IR firms) are associated with lower levels of agency costs and more negative year-to-year changes in agency costs compared to other IR firms (low IR firms). We also find that the relation between the level of IR practice and agency costs is more negative in countries with a stakeholder orientation than in countries with a shareholder orientation. Additionally, the effectiveness of IR is more pronounced in diversified firms that face greater agency problems. Our results are robust in a series of additional tests that address endogeneity. Overall, our evidence is consistent with IR having a disciplining role for managers.

Keywordsintegrated reporting; agency costs; corporate governance; voluntary adoption
Year2021
JournalEuropean Accounting Review
Journal citation30 (4), pp. 645-674
PublisherRoutledge
ISSN0963-8180
Digital Object Identifier (DOI)https://doi.org/10.1080/09638180.2020.1805342
Scopus EID2-s2.0-85089579980
Page range645-674
FunderLa Trobe University
University of Auckland
Publisher's version
License
All rights reserved
File Access Level
Controlled
Output statusPublished
Publication dates
Online18 Aug 2020
Publication process dates
Accepted26 Jul 2020
Deposited16 Jun 2023
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https://acuresearchbank.acu.edu.au/item/8z226/integrated-reporting-and-agency-costs-international-evidence-from-voluntary-adopters

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