Evaluating The Relationship Between Integrated Reporting And Financial Indicators In Jse-Listed Companies

Abstract

The paper explores the relationships between a comprehensive list of financial indicators and the quality of Integrated Reporting disclosed in companies listed on the Johannesburg Stock Exchange. These relationships were investigated using the Ernst & Young (EY) Integrated Reports Awards and financial information obtained from IRESS Ltd for a selection of 45 companies over four years (2014 to 2017), and using Spearman rank-order correlations, a Breusch Pagan test, and five multiple regression analyses. The results indicate a similar trend in the direction of relationships between the baseline and other models, except for price-earnings and net profit margin. Statistically significant positive relationships were identified between Integrated Report Quality (IRQ) and average debtors collection (DEBT), earnings before interest, taxes, depreciation and amortisation (EBIDTA) and return on equity (ROE). Statistically significant negative relationships were identified between IRQ and fixedassets turnover (FATURN), inventory turnover (INV), earnings before interest and taxes (EBIT) dividend yield (DIVYIELD), dividend cover (DIVCOV) and return on capital employed (ROCE). The results of this study can assist companies in the effective and productive allocation of their capitals, which in turn will enhance long-term sustainability.