Does Sustainability Report Give more Value Relevance Rather Than Integrated Report? : A Study among G-20 Countries
DOI:
https://doi.org/10.64137/31079423/IJEBMR-V2I1P107Keywords:
Sustainability Report, Value Relevance, Integrated ReportAbstract
The changing nature of the business environment has seen an increase in awareness on the importance of nonfinancial data when valuing companies and looking at their long-term sustainability. This is due to the argument that traditional reporting methods did not meet all stakeholders' demands of information. The more business entities disclose nonfinancial information, the better it is for reducing market issues and increasing capital market efficiency. The sustainability report and the integrated report, is a revolutionary reporting structure that aims to combine financial and nonfinancial data into a single cohesive report. However, it should be noted that simply creating sustainability or integrated reporting does not ensure greater value for the organization. It is critical that sustainability and integrated reporting go beyond simply delivering information and data, that demonstrate value-relevance by drawing a direct line between a company's sustainability initiatives and its financial performance. This research is designed to examine the value-relevance of integrated and sustainability through a comparison of integrated reports to sustainability reports and assess what effect of these reports has on the investment decisions of their stakeholders. Using of the value-relevance model by Ohlson to assess the relevance of disclosed information to market valuation, of which sample uses companies from G20 that report Integrated Report on IIRC as community member of GRI from 2020-2024. The results indicate that value-relevance for integrated reports is higher than sustainability reports, which means Integrated report can improve the value-relevance of accounting data, but unable to enhance the earnings per share. Integrated reporting indeed offering stakeholders more insight into the financial health and valuations of their assets.
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