Integrated reporting: the links between its adoption and board characteristics.

Purpose – Nowadays, companies and markets are increasingly international, and a growing number of stakeholders are affected by the social and economic aspects of business. This has resulted in significant changes in how corporate information is both perceived and published. Over the last few years, this emerging scenario has led the Boards of Directors of many companies to voluntarily adopt the accounting and company performance communication tool, known as integrated reporting (IR). IR is a single disclosure document that satisfies the increasing need for communication by stakeholders. This study’s objective is to contribute to the existing literature on the relationship between financial reporting and corporate governance by investigating whether or not certain characteristics of the board – including number of members, gender, nationality, and average age – influence the decision to adopt IR. Design/methodology/approach – Several relevant hypotheses are tested on a total of 117 Italian companies, comprising 16 companies that adopted IR on an ongoing basis from 2012 to 2014 (excluding financial and insurance corporations) and a random selection of non-financial companies that did not adopt IR in the same period. Logistic regression (Logit) with a binary dependent variable (IR adoption) is used to test features of the board. Originality/value – Unlike previous studies, which have focused on analyzing the effects of adopting IR, our research takes an upstream position to check whether certain board features influence the decision to adopt IR. To the best of our knowledge, this is the first study of its kind. Findings – The results show a positive relationship between the decision to use IR, the size of the board, and the presence of female board members. The presence of foreign and older board members has a negative effect on IR adoption. Practical implications – We believe that a deeper understanding of the factors influencing the decision to adopt IR is essential for academics, companies and, especially, policymakers.