The Value-Relevance of Integrated Reporting: A Cross-Country Analysis of Egypt, South Africa and Europe

Abstract

This paper aims to investigate the value relevance of accounting information under integrated reporting (IR) in a comparative mandatory and voluntary setting. It examines the relationship between the level of integrated reporting based on the extent of adoption of the International Integrated Reporting Framework (IIRF) and the value relevance in Egypt, Europe and South Africa. Moreover, the differences in the value relevance of integrated report between those countries is also investigated. We used data of 45 non – financial companies (that construct 315 firm-year observations) listed on the Egyptian stock exchange and from registered companies on the JSE or on a European stock exchange for the period 2015–2021. Two regression models assessed the value relevance of IR. The results indicate that there is a positive relationship between the level of IR adoption and value relevance based on the price and return model in Egypt and south Africa but not in Europe. Furthermore, this study found strong evidence that there is a significant difference in the value relevance of integrated reports in Egypt, South Africa and Europe where the integrated report was issued voluntarily or mandatorily. In general, the results suggest that the IR type moderates the relationship between the level of IR adoption and value relevance. The findings bring out different implications for managers, decision-makers, policymakers, professional accounting bodies and the research community as well. This study further expands the existing knowledge on integrated reporting and sets the foundation for future researchers.