Mandatory Integrated Reporting Disclosure and Corporate Misreporting

Purpose: This paper aims to enrich understanding of whether mandatory IR adoption lures firm into misreporting or forces them to reduce it. Design/methodology/approach: The empirical analysis is carried out based on the sample containing all publicly listed firms in South Africa. Many different rigorous econometric techniques are adopted to thoroughly evaluate whether corporate misreporting practices increase or decrease following the mandatory adoption of IR. Findings: The empirical results reveal that mandatory IR disclosure results in a decline in the misreporting practices of firms. We further find that as firms increasingly comply with the IR guidelines, especially with the ‘Content Elements’ and ‘Guiding Principles’, their misreporting levels decrease. Originality/value: This paper sheds light on the emerging debate over the usefulness of IR and the necessity of mandatorily adopting this new reporting framework. In addition, by showing that the mandatory adoption of IR significantly reduces corporate misreporting practices, we also contribute to the literature on corporate misreporting behaviour.