Limitations of Current Financial Reporting: A Case for Integrated Reporting
26 Pages Posted: 23 Mar 2015
Date Written: November 21, 2014
Purpose - The landscape of corporate reporting is about to change completely. The article aims to determine the disclosures required if the new form of reporting is adopted as an upshot of limitations of the current financial reporting and sustainability reporting. Though top few companies have in the recent past started preparing Corporate Social Responsibility (CSR) reports and sustainability report as per Global Reporting Initiative (GRI), guidelines along with Annual Report, there seems to be certain gaps which the companies need to fill. Though Integrated Reporting is successfully adopted in South Africa and countries of Europe, its viability or need in India has been examined with the help of current research paper.
Design/methodology/approach - The research paper comprises of a literature review, extraction of factors using Exploratory Factor Analysis (EFA) and Multiple Regression Analysis among the factors identified as dependent and independent. Factor scores of limitations of financial reporting and the disclosures sought in new form of reporting emerging due to the limitations were then used in the Multiple Regression to predict the degree of dependence of disclosures sought as a result of failure of current financial reporting.
Findings - A new form of reporting is evolving due to the limitations of current financial reporting, which should have information about ecological footprints of operations, Economic, Social, and Environmental impact.
Research limitations/implications - The research paper underpins the idea of incorporation of Environmental, Social & Governance (ESG) issues and Sustainability into the core strategy of business. It is hoped that this research will provide insights relating to the importance of understanding environmental, and social sustainability in achieving long term success.
Keywords: ESG, Sustainability, Social and Environmental impact, non-financial information, integrated reporting
JEL Classification: L29, M41, M42, M49, Q01, Z0
Suggested Citation: Suggested Citation