Why Do Companies Adopt an Integrated Report? First Insights into a Legitimacy Theory Explanation

In the field of voluntary disclosure a new reporting format has gained momentum: the so-called “Integrated Report” (IR). It embeds material contents of financial and sustainability reports into a single document, providing a clear and concise representation of how an organization’s strategy, governance, performance and prospects lead to value creation over time. The International Integrated Reporting Committee (IIRC) has recently launched a pilot programme on IR and more than a hundred of business firms and investors have joint this initiative. Social and environmental accounting researchers have lively debated about the use of voluntary disclosure as a symbolic practice. In line with this, the paper tests whether the decision to adopt an IR stems from particular needs related to poor legitimation. Considering Bloomberg’s social, environmental and governance ratings as proxies of public perception of firm’s commitment to sustainability issues, the analysis shows that IR early adopters have significantly higher scores relative to non-adopters. This evidence casts a shadow on legitimacy theory explanation of IR adoption, and calls for further investigations on reasons for embarking on this innovative programme.