Voluntary and Mandatory Integrated Reporting Conformity with the International Integrated Reporting Council Framework

We aim to assess the difference in integrated report conformity towards the IIRC framework for companies who produce it voluntarily and those who were enforced. We study Brazilian companies because due to regulatory requirements, state-owned companies are mandated to publicly disclose an integrated report, while others may choose to do so voluntarily. The analysis involved a total of 1673 observations in panel data from 2018 to 2021 and was developed through six explanatory econometric models. A checklist based on the International Integrated Reporting Council (IIRC) framework was used to conduct a survey on the reports to assess their conformity levels. The conformity level of listed companies that disclose IR is higher than that of state-owned companies, and it is primarily influenced by firm size, age, and board composition (board size and diversity). The hypothesis that mandatory disclosure would be associated with higher conformity level was not supported by our result, and empirical evidence is provided on the low effectiveness of integrated reporting enforcement. Moreover, evidence that women’s participation on the board of directors enhances IR disclosure may encourage future studies to delve deeper into this issue of diversity. Given that the IR framework reflects a holistic view of value creation, the study also reinforces the potential of Integrated Reporting as a tool to support and communicate alignment with the United Nations Sustainable Development Goals (SDGs).