The Relation between Integrated Reporting Disclosure and Value Creation: Evidence from Egyptian listed Companies

Abstract

Traditional corporate reporting methods are become inadequate in addressing the diverse informational needs of stakeholders. There is an increasing need for enhanced transparency and disclosure which contain both quantitative and qualitative data to evaluate companies' success in meeting their social and economic objectives. While integrated reporting (IR) has gained traction as a globally endorsed practice for corporate disclosure in numerous markets, recent research underscores its nascent adoption in developing nations. Thus, this investigation delves into the extent of IR disclosure within Egyptian-listed companies and probes its correlation with value creation for these entities. Employing panel regression analysis on a sample comprising 25 Egyptian listed companies, specifically those within the EGX100, spanning a five-year period (2017–2021), this study utilizes a content analysis to measure IR disclosure levels, Tobin’s Q is used as a measurement for the company value. The results show a noteworthy positive relation between IR disclosure levels and company value, indicating that such disclosure yields benefit across both mandatory and voluntary reporting environments, with a more pronounced impact observed in mandatory regimes. This study has a contribution to the literature by furnishing empirical insights from a developing market and implement a comprehensive disclosure index to measure the level of IR. Practical implications include advocating for policymakers and regulators in Egypt to enforce mandatory IR requirements, and it offers valuable insights for managers, auditors, and analysts, in guiding financial decision-making based on annual reports.