The level of compliance with the Italian Legislative Decree No. 254/2016 and its determinants: Insights from Italy

The present research explores non-financial mandatory disclosure in Italy in light of the recent Italian Legislative Decree No. 254/2016, which transposes the Directive 2014/95/EU on “the disclosure of non-financial and diversity information”. The study pursues a twofold aim: first, it seeks to measure the level of compliance of non-financial information (NFI) with non-financial mandatory disclosure. Second, it aims to identify which determinants favor a higher level of compliance in the first year of the regulatory adequacy. To these ends, the study develops a NFI Disclosure Score and assesses the level of compliance on the 2017 non-financial statements of 50 listed Italian companies. Then, the research tests whether the reporting channels (stand-alone report or NFI disclosure included in the Annual Report), the GRI (Guidelines Reporting Initiative) options chosen by the companies and the presence of the CSR (Corporate Social Responsibility) Committee within the Board could explain the level of compliance. The findings indicate that the NFI Disclosure Score is equal to 52.58% and the type of reporting channels, the GRI options, and the presence of the CSR Committee within the board all affect compliance levels. This study is one of the first research conducted on mandatory NFI disclosure providing indications for regulators and companies on how to improve NFI disclosure.