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JFRA
20,3/4 Factors associated with the
voluntary disclosure of the
integrated report in Brazil
446 Ruhama Bezerra Fernandes and Alexandro Barbosa
UFRN, Natal, Brazil
Received 31 July 2020
Revised 3 October 2020
28 February 2021
15 May 2021
Accepted 7 July 2021 Abstract
Purpose – This paper aims to investigate the factors associated with the voluntary disclosure of integrated
reporting (IR) in Brazil of the companies listed on the stock exchange – Brasil, Bolsa, Balcão. The cultural
dimensions of a nation reflect different priorities in accounting practices. The Brazilian case, therefore,
becomes significant, as Brazil is increasingly important in world markets.
Design/methodology/approach – As an explanatory econometric model, multinomial logistic regression
was used (Y = 2 to describe the probability of the IR disclosure; Y = 1 to describe the occurrence of reports with
practices similar to the IR and Y = 0 to describe the occurrence of non-disclosure of non-financial reports).
Applied to panel data with random effects (chosen for best performance) in the period from 2016 to 2019.
Findings – Reveals the positive association of the company’s profitability and market-to-book with the
probability of the IR disclosure. Regarding the board composition, it is suggested that size does not make a
difference, with the greater participation of women and independence of directors associated with better
probabilities of adopting the IR in Brazil.
Originality/value – This work is the first to characterize the Brazilian reality of voluntary disclosure,
specifying the implementation of IR, compared to publishing reports similar to the IR and not reporting structured
non-financial statements. It can also be considered the first study on the relevance of the board structure in the
disclosure of IR by Brazilian companies. Finally, it contributes to the literature on IR adoption, bringing practical
results in understanding the most favorable conditions in which the IR framework will be fully implemented.
Keywords Brazil, Voluntary disclosure, Integrated reporting, Factors associated
Paper type Research paper

Journal of Financial Reporting and
Accounting
Vol. 20 No. 3/4, 2022
pp. 446-471
© Emerald Publishing Limited
1985-2517
DOI 10.1108/JFRA-07-2020-0220
1. Introduction
Although monitoring the financial performance of a company remains important, the need for
non-financial information has increased. According to data from the Ernst and Young Global
Limited (2015) survey, carried out with more than 200 institutional investors in the period from
2014 to 2015, 61.5% of respondents found that non-financial information is more relevant to
their decisions, supposedly explained by limitations of informational captures in the context of
the increasing relevance of intangible assets; growth of demand for environmental, social and
governance information and; the need for the set key performance indicators that is most useful
in signaling the company’s future performance (Eccles and Krzus, 2010).
Environmental and social disclosures have grown exceptionally over the years, having
evolved from about one page (with information related to employees) of disclosure in the
1970s to detailed and independent sustainability reports issued by many publicly held
corporations (Qiu et al., 2016), that is, for about six decades there have been concerns about
combining both financial and non-financial data in one annual report. Currently, the
The authors are grateful for the assistance received by the CAPES (Coordenação de Aperfeiçoamento
de Pessoal de Nível Superior) public foundation.
international debate center on this informational fusion is promoted by the International Integrated
Integrated Reporting Council (IIRC), through the framework for integrated reporting (IR). report in Brazil
The IR corresponds to a concise representation of how companies create value over time,
combining financial information with environmental, social and governance information
(IIRC, 2014). Thus, the IR was created with the intent of providing companies with the tools
for an account for their operations in a more holistic and integrated manner, improving the
usefulness of the information, as well as adding some specific details of the financial reports
447
(Reuter and Messner, 2015).
Regarding the evolution of the IR adoption, in 2020, 11% [1] of the 100 largest companies
worldwide (N100) and 22% of the 250 largest companies in the world by revenue, based on
the Fortune 500 ranking of 2016 (G250), labeled their annual reports in accordance with the
framework for IR, therefore, 5% [2] of the N100, which label their annual reports as
integrated reports, are not in compliance with the framework for IR (KPMG, 2020), that is,
they are reports similar to that proposed by the IIRC.
Between 2015 and 2017, there was an increase of 3 percentage points among the N100,
who labeled their reports as integrated. For this same phenomenon, the increase was 2
percentage points between 2017 and 2020, therefore, the adhesion to the integrated report
follows the ascending trajectory in a gradual and constant way over the years. About the
adoption of the framework for IR in the most recent comparative period, the positive
evolution was 4 percentage points (KPMG, 2017, 2020), suggesting an increase in the
acceptance of the IIRC initiative.
The scientific environment on IR has been catalyzed by the official formation of the IIRC
and has been increasingly strengthened after the debates on the pilot program (2011) and
after the publication of the framework for IR (2013).
Such events motivated the development of important international empirical studies on
factors favorable to the disclosure of IR by companies, which explored some theories such as
legitimation (Girella et al., 2019; Lai et al., 2016); signaling (Girella et al., 2019; Fiori et al.,
2016; Frias-Aceituno et al., 2014); stakeholders (Girella et al., 2019; García-S
anchez et al.,
2013; Frias-Aceituno et al., 2013); agency (Girella et al., 2019; Fiori et al., 2016; Frias-Aceituno
et al., 2014, 2013) and proprietary costs (Girella et al., 2019; Frias-Aceituno et al., 2014, 2013),
being investigated the relevance of several explanatory factors such as size, profitability,
leverage and board characteristics.
The environmental and economic aspects of each country are explanatory factors for the
adoption of IR (Jensen and Berg, 2012). For this reason, considering that the IIRC has a
comprehensive objective of achieving global IR convergence. The Brazilian case, therefore,
becomes significant, as Brazil is increasingly important in world markets.
Brazil is part of the BRICS group formed by five countries with an emerging economy
(Brazil, Russia, India, China and South Africa), which maintains a political alliance to help
leverage its geopolitical influences in the world. From the governmental point of view,
increasing pressure to legitimize the practice of IR helps to promote global initiatives such
as the UN Sustainable Development Goals.
Also, the Brazilian context has unique elements: the country is marked by social
differences due to its history of colonization and slavery, as well as a market system with
strong governmental influence, the so-called “state capitalism” (Taylor, 2015). In addition,
Duarte et al. (2017) argue that the reality of greater concentration of control by the majority
shareholders and the low legal protection for investors may lead to less relevance of the
accounting numbers. Consequently, IR’s non-financial information can be important, not
only for companies but also for regulators and for other stakeholders.
JFRA Several initiatives around the world encourage companies to adopt the IR. In the
20,3/4 Brazilian case, the São Paulo stock exchange – Brasil, Bolsa, Balcão – [B]3, began to require,
from 2012, through the “Relate or Explain” project, a statement from companies on whether
or not to publish sustainability or integrated reports. The Securities and Exchange
Commission – CVM also requires in the “Reference Form,” regarding the disclosure or not of
social and environmental reports and IR. In the public sphere, Law n. 13303/16, known as
448 the State-owned enterprise’s Law, was enacted, which requires the annual disclosure of the
integrated or sustainability report by Brazilian state-owned companies. In addition, the
Federal Audit Court – TCU started to require that, starting in 2019, the 1.115 federal public
administration bodies should adopt IR.
In this sense, in the Brazilian scenario, only state-owned companies and the federal public
administration bodies are required to adopt IR, being voluntary for other entities, that is, 10
of the 328 companies listed in [B] 3 would be required to disclose combined financial and
non-financial reports (IR or sustainability report) as of the fiscal year 2016.
Currently, the adoption of IR is mandatory only for South African companies,
establishing a majority disclosure practice. Japan and Sri Lanka companies also have
majority practices in the adoption of IR (KPMG, 2020), but on a voluntary basis and,
according to KPMG (2020), only these three countries along with France (voluntary) are
ahead of Brazil (33 companies), in a number of companies (N100 and G250) that joined the IR
framework until 2020.
Although Brazil is among the top 4 in quantitative adoption and despite the whole set of
incentives for the implementation of the IR, the majority of [B]3 companies are not adopting
the referred report. Therefore, the need for a study to investigate the determinants of its
disclosure in Brazil is highlighted. Emerging, thus the objective to be achieved by this work:
Investigate the factors associated with the voluntary disclosure of IR in Brazil of the
companies listed on the stock exchange [B]3.
In the previous study for the Brazilian scenario, Rizzi et al. (2019) analyze the determining
factors on the conformity of the framework for IR in [B]3 companies and Ricardo et al. (2017)
set out to investigate the variables that influence the joint probability of publishing the
sustainability report and IR of [B]3 companies. As far as we are aware, these are the only two
empirical studies on IR in Brazil (peer-reviewed) and both considered IR and sustainability
report (jointly) as the only analysis group. In this sense, the adoption of the framework for IR
in [B]3, as a phenomenon studied separately, can be considered as a scientific gap, which this
investigation intends to fill, representing the main point of origin of this work.
Therefore, this study is distinguished by the evidence aspects of corporate governance, as
well as individually highlighting the framework for IR in the Brazilian case. Thus, the results of
this study complement the literature, as it is the first to particularize in the same study the
explanatory factors for the adoption of IR, compared to publishing reports similar to the IR and
not reporting structured non-financial statements. This analysis structure resulted in the need
to use polytomous categorical dependent variable and required methodological innovations not
observed in the previous literature (national and international) on relevant factors for the
adoption of IR (Table 1), as diagrammed in Figure 1.
Furthermore, Rizzi et al. (2019) and Ricardo et al. (2017) did not study the relevance of the
board structure (including with regard to collectivism, gender diversity and independence)
in the adoption of the framework for IR in the companies listed in [B]3, leaving another
scientific gap to be explored in this work and that can be considered another point of
originality of our investigation.
The conclusions of this study can provide important suggestions, mainly to the IIRC, on
which companies may be the most relevant for the broader adoption of IR in the reality of
Paper/scope Aim Model Main finds

Girella et al.(2019) “Examine the influence that both
Sample: 349 international companies firm- and country-specific
from 19 countries: 71 companies that characteristics have on the voluntary
joined the IIRC practices and 278 uptaking of integrated reporting
companies that did not internationally”
Period analyzed: 2016
Rizzi et al. (2019) “Analyze the determining factors on
Sample: 254 Brazilian companies the conformity of the integrated
reports with the guidelines issued by
listed in the B3 “report or explain”
list the International Integral Reporting
Period analyzed: 2015 Council in Brazilian public
companies”
Ricardo et al. (2017) “Identify which variables can
Sample: 386 Brazilian companies influence the probability of disclosure
Period analyzed: 2011–2014 of the sustainability report or
integrated reporting by companies
listed on the BM&FBOVESPA in the
years 2011 to 2014”
Fiori et al. (2016) “Analyze the corporate governance
Sample: 172 European companies: 35 factors associated with the voluntary
companies that joined the Pilot decision to prepare an Integrated
Program in 2011 and 137 similar Report according to the <IR>
companies that did not International Framework promoted
Period analyzed: 2011 by the IIRC”
Logistic regression “firms are more likely to implement integrated
(binary response) reporting if they are located in countries with a higher
level of corruption perception and a better risk rating
and that are considered as relatively more collectivist
and feminist and with a long-term orientation. Legal
system has resulted to be not significant”
“large size, profitability, market-to-book ratio and the
size of the board are found to be significant variables”
“adoption of integrated reporting is not influenced by
a higher level of leverage, firm efficiency and board
diversity and independence”
OLS regression “The main factors that influence the level of
conformity of information disclosed by the companies
investigated are the return on assets, the size of the
company, the sales growth, the market-to-book
relation and presence in the business sustainability
index”
Logistic regression “Size and the company’s participation in the ISE
(binary response): Pooled portfolio impact positively the likelihood of disclosure
and panel data with of the reports. On the other hand, the variables
random effects ‘profitability,’ ‘level of corporate governance’ and
‘sector’ did not have significant results for the selected
sample.” ISE is the corporate sustainability index
Probit regression (binary “Adhesion to the IR Pilot Program is positively related
response) to the gender diversity and size of the board”
(continued)
report in Brazil

Table 1.
449
Integrated

Literature outline

Table 1.
Paper/scope
Frias-Aceituno et al. (2014)
Sample: 1,590 international
companies from 20 countries.
Period analyzed: 2008–2010
Lai et al. (2016)
Sample: 104 international companies: adopt an IR stems from the need to
52 companies that joined the IIRC
Pilot Program and 52 similar
companies that did not
Period analyzed: 2009–2011
García-S
anchez et al. (2013)
Sample: 1,590 companies from 20
countries
Period analyzed: 2008–2010
Frias-Aceituno et al. (2013)
Sample: 568 companies from 15
countries
Period analyzed: 2008–2010
Aim
“Contribute to existing knowledge of
these questions, examining the effects
of industry concentration and other
explanatory factors on business
practices underlying the production
and disclosure of an integrated
report”
“Investigates whether the decision to
repair legitimacy threats”
“Examine the impact of the Hofstede
national cultural system, which is
representative of the values of local
stakeholders, on integrated reporting,
in comparison with the provision of
various unrelated documents on
corporate performance”
“Demonstrate the influence played by
certain features of the Board of
Directors in the degree of information
integration presented by leading non-
financial multinational firms”
450
JFRA
20,3/4
Model Main finds
Logit model (binary “Negative impact of industry concentration on the
response): panel data with development of a more pluralist report, simultaneously
random effects taking into account stakeholders, sustainability and
the long-term viewpoint, as well as questions of
responsible investment, business ethics and
transparency”
Univariate analysis: “Additional results on different sources of legitimacy
difference in mean t-test; threats (size, leverage, profitability and industry)
and Logistic regression further support the idea that firms are not adopting IR
(binary response): Pooled as a legitimation strategy”
panel data
Logit model (binary “Companies located in societies with stronger
response): panel data with collectivist and feminist values are in the vanguard of
random effects information integration”
Tobit regression “Growth opportunities, the size of a company and its
(continuous responses): management bodies, together with gender diversity,
panel data with random are the most important factors in the integrated
effects dissemination of information”
OBS: These findings precede the establishment of the
IR framework
 Polytomous categorical
dependent variable
Integrated
report in Brazil
Multinomial Logit Model

Model
Assumptions

Pooled Panel data

451
Pooled multinomial logistic Multinomial logistic
regression (traditional) regression with random
effects

Assumption Choice:
Less AIC and BIC
LRT (model with
restriction)

Explanatory model with Explanatory model without

MTB (Specific model)
Response to H4
Figure 1.
MTB (Main model) Diagram for choosing
the explanatory
Response to H1, H2, H3, econometric model
H5, H6, H7 and H8

[B]3. To better determine the strategies to encourage the implementation of the report to
other non-adopting companies, based on the investigation of the individual characteristics of
the firms.
Equally, in a practical way, insights are important for companies that are willing to
adopt IR and for investors who are interested in specific IR information, as it helps
understand under what conditions IR will be most expected. Highlighting the potential
relevance of size, financial performance (by including variables regarding profitability and
leverage), intangible [market-to-book (MTB)], sector and elements of corporate governance
(size of the board, its diversity and its independence).
To achieve the objective of this work, the remainder of the paper is arranged as follows.
Section 2 provides a brief description of the integrated reported in Brazil. Section 3 provides
a content analysis of the theoretical backgrounds and development of hypotheses. Section 4
describes the research data; definition of variables and explanatory econometric model. In
Section 5, we present an analysis and discussion of the results, while Section 6 concludes.

2. Literature review
2.1 Integrated reporting in Brazil
Voluntary disclosure covers everything that exceeds what is recommended by law,
consequently encompassing both financial and non-financial information. Over time, the
literature on voluntary disclosure by Brazilian companies has focused on voluntary items in
mandatory financial publications.
With regard to non-financial companies, Silva and Christensen (2004) investigated the
determinants of voluntary disclosure on the internet of mandatory financial reports. On the
other hand, Murcia and Santos (2010) categorized the financial and non-financial items of
mandatory financial publications, finding differences in the determinants of these
publications. Regarding financial companies, Forte et al. (2015) were willing to investigate
the factors that influence the level of voluntary disclosure of companies in the Brazilian
banking sector.
JFRA Gradually, socio-environmental information started to be adopted more, as a tool to
20,3/4 inform stakeholders and, thus, achieve social conformity (Grecco et al., 2013). Calixto (2013)
analyzed comparatively the socio-environmental information released by Latin American
companies in their reports, noting that the companies established in Brazil are the ones that
stand out the most. Still, on information about sustainability, Grecco et al. (2013) showed
significant differences between Brazilian and Spanish companies.
452 In this sense, given the global vision of “improvement” and evolution in the relations
between society and organizations, the search for the integration of sustainability
information arises (Barros et al., 2018). Thus, the integrated report emerges, bringing as
a main novelty this interrelation between financial and sustainability information that
is presented in an integrated manner. With a focus on providing a holistic view of
creating value for companies, connecting information that was previously disconnected
information that refers to the combination of several capitals: financial, manufactured,
human, intellectual, social and relationship and natural (Baboukardos and Rimmel,
2016).
In the Framework, it is possible to verify that the main objective of IR, seen as an
evolution of the Annual Report is: “to improve the quality of information available to
financial capital providers to allow a more efficient and productive capital allocation” (IIRC,
2014, p. 2). Barros et al. (2018) show that the adoption of IR increases the level of value
relevance of information disclosed by Brazilian companies.
Also, studies such as Loprevite et al. (2018) confirm the IIRC’s assessment that the
integrated report is expected to improve the quality of traditional accounting information for
financial capital providers. Therefore, when analyzing the value relevance of the integrated
reports of companies in Europe, they found that the degree of relevance of the profit value is
significantly different for companies that publish IR compared to companies that adopt only
the traditional financial report.
In the Brazilian reality, combined with the objective of this study, Rizzi et al. (2019) and
Ricardo et al. (2017), whose objective was to identify the variables that influence,
respectively, the level of IR compliance in relation to the Framework; and the probability of
publishing the sustainability and IR report. Both found significant positive associations of
size and the Corporate Sustainability Index (ISE) with IR.
The São Paulo Stock Exchange created the ISE and its purpose was to stimulate
corporate social responsibility and ensure an investment environment compatible with
society’s demands for sustainability (Nunes et al., 2010). However, the ISE was not
considered for the purposes of this study, as it is understood that there is a simultaneity bias,
as the items contemplated to compose the ISE portfolio are part of the IR dimensions. That is
why a good part of ISE companies already adopts the guideline and those that do not adopt
it, the tendency is the implantation because they are inserted in the middle of a great focus of
environmentalists.
Regarding corporate governance, Murcia and Santos (2009) found a positive relationship
between the level of voluntary disclosure and companies that adhere to the differentiated
levels (Level 2 and Novo Mercado) of corporate governance, created by BM&FBovespa
(formerly the Brazilian Stock Exchange), to improve business valuation.
On the other hand, it is noteworthy that previous international studies were dedicated to
investigating the relationship between aspects of the board of directors and the IR (Frias-
Aceituno et al., 2013; Fiori et al., 2016; Girella et al., 2019). As this research gap of Brazilian
companies has not yet been filled, it was decided to analyze the characteristics of the boards
of directors.
2.2 Theories of voluntary dissemination Integrated
Cotter et al. (2011) report that the choice of the appropriate theory to support research in report in Brazil
voluntary disclosure depends on the type of information and the stakeholders. As the study
in question focuses on non-financial information that, in principle, must meet the needs of
investors and society, in the quest to reduce informational asymmetries, the agency and
stakeholder theories are indicated as the basis of this study.
Thus, on agency theory, Jensen and Meckling (1976, p. 308) define an agency relationship
“as a contract under which one or more people (principal) hires another person (agent) to 453
perform some service on their behalf, involving the delegation of some decision-making
authority to the agent.” Therefore, as each one wishes to maximize their interests and, due to
informational asymmetry, agency conflicts arise.
Therefore, knowing that the interests of the directors, who control the company, can go
against the interests of the shareholder, who owns the property, the agency costs, thus arise.
Fama and Jensen (1983, p. 304) mention that: “agency costs include the costs of structuring,
monitoring and linking a set of contracts between agents with conflicting interests.”
In the view of the integrated report, García-S
anchez and Noguera-G
amez (2017)
confirmed that there is a negative relationship between information asymmetry and IR
disclosure, for this reason, they concluded that IR can be used as a tool to mitigate problems
agency, facilitate decision-making and improve information among investors. Frias-
Aceituno et al. (2013) highlight that in the agency’s relationship involving more
stakeholders, social information plays the same role, thus achieving comprehensive
accountability through IR.
The work entitled strategic management: a stakeholder approach with Freeman’s ideas
(1984) is taken as a basis for the theory of stakeholders. This theory emerged from an
organizational context, where the company was perceived as not being self-sufficient but
also dependent on the external environment composed of groups external to the
organization (Mainardes et al., 2011).
According to the results of Vitolla et al. (2019) pressure from stakeholders is one of the
main determinants of IR quality. Therefore, as in Freeman’s perspective (1984), stakeholders
affect companies’ actions, which they are motivated to disclose to ensure that their behavior
is perceived legitimate and to assist interested parties in making decisions.

3. Development of hypotheses
3.1 Size
Larger companies have particular characteristics that distinguish them from smaller ones. It is
observed, for example, that larger companies use the capital market more extensively for
financing, that is, there is a greater need for external funds. Therefore, in this situation, from the
perspective of agency theory, agency costs increase, considering that the likelihood of conflicts of
interest between shareholders, creditors and managers also (Frias-Aceituno et al., 2014).
Consequently, to reduce information asymmetries, voluntary disclosure can be used as a
way to reduce or even maintain a “normal” level of agency cost. In the investigation by
García-S
anchez and Noguera-G
amez (2017), the usefulness of integrated reports was
confirmed as a reducing factor of information asymmetry from a sample of 995 companies
from 27 countries observed from 2009 to 2013.
In this sense, larger companies have greater public visibility, making them more
concerned with transparency and reputation (Murcia et al., 2008). Therefore, they are
motivated to disclose voluntary information to stakeholders to ensure that their behavior is
considered legitimate. Therefore, the following hypothesis is suggested:
JFRA H1. There is a positive relationship between the size of the company and the voluntary
20,3/4 adoption of IR.
Ricardo et al. (2017) found a positive association between the size and adoption of
sustainability reports or IR, when using the list of companies published by [B]3 of the
“Report or Explain” project, in the years 2011 to 2014.
Studies by Frias-Aceituno et al. (2014) and Girella et al. (2019) also confirm this
454 positive size association with IR with companies from several countries. Rizzi et al.
(2019) also found that larger companies listed in [B]3 have a higher level of IR
compliance with IIRC guidelines. Despite this, Lai et al. (2016) did not find a significant
impact of size on the disclosure of the IR. In this study, they considered only IR
adopters of the IIRC Pilot Program in the years 2009 to 2011, which may explain the
difference.

3.2 Profitability
Martínez-Ferrero et al. (2016) suggest that reducing asymmetries through voluntary
disclosure is relevant, especially in relation to stakeholders. Because companies can improve
the trust of financial markets and increase shareholder value. In their results, Martínez-
Ferrero et al. (2016) showed that similar to the size of the company, profitability is associated
with less information asymmetry.
From the point of view of the agency’s theory, voluntary information is released to keep
agency costs under control, to guarantee access to financing necessary for the continuity of
the company. In addition, the decision to voluntarily disclose also runs through the existing
trade-off between the potential benefits of reducing information asymmetries and the costs
of revealing important information.
About that, Troberg et al. (2010) mention that the most profitable companies can benefit
more from disclosing information to the capital market, to avoid information asymmetries
attributable to adverse selection, than retaining such information based on potential
competitive data.
In this sense, Frias-Aceituno et al. (2014) and Girella et al. (2019) found that profitability
influences the adoption of IR, the most profitable companies voluntarily disclose to
differentiate themselves from the least successful, raise capital at the lowest possible cost
and avoid reducing stock prices.
Conversely, Lai et al. (2016) and Ricardo et al. (2017) did not find significant results
between profitability and the adoption of IR, signaling for real possibilities of controversial
empirical findings. Thus, the second hypothesis is suggested:

H2. There is a positive relationship between the profitability of the company and the
voluntary adoption of IR.

3.3 Leverage
Companies with greater leverage are subject to greater attention from stakeholders and
creditors who want to know if the company will be able to create value in the medium and
long term to honor its debts. In addition, to signal greater reliability and reduce
asymmetries, companies should be aware of the use of newly emerging reports such as IR,
as creditors may require non-financial information that is covered in this report (Girella
et al., 2019).
 Thus, the hypothesis is based on the idea that as the debt increases, the demand for Integrated
information also increases. From the perspective of agency theory, Jensen and Meckling report in Brazil
(1976) reinforce that agency debt costs are higher for companies with relatively more debt in
their capital structure.
IR’s social and relationship capital emphasizes, precisely, this bond of trust built with
stakeholders. The way in which the company deals with transparency and reputation are
basic points in this item. Therefore, the hypothesis is suggested:
455
H3. There is a positive relationship between the leverage of the company and the
voluntary adoption of IR.
Both in the study by Lai et al. (2016) and in the study by Girella et al. (2019), no significant
associations were found between the leverage and the dissemination of IR.

3.4 Market-to-book
From the point of view of the stakeholder theory, the most valued companies tend to receive
more attention from the market and, thus, organizations must take into consideration the
interests of stakeholder groups, not only of shareholders (Vitolla et al., 2019).
From the perspective of agency theory, the informational asymmetry that exists between
managers and shareholders of these companies with growth opportunities can have a
negative impact on potentially profitable projects, therefore, it is expected that companies
with larger MTB disclose more to mitigate these agency costs.
The increasing relevance of intangible assets meant that measures such as the MTB
could be used more for business valuation, as intangibles are not adequately captured by
financial reports (Eccles and Krzus, 2010). Examples are companies in the technology sector
that tend to present low tangible investments but tend to show a high MTB. For this reason,
Girella et al. (2019) highlight this variable and also call attention to the fact that three of the
six capitals addressed in IR are of an intangible nature (social and relationship, human and
intellectual). The MTB can only be calculated when Shareholders’ Equity is positive. Based
on the above, the fourth hypothesis was defined:

H4. There is a positive relationship between the MTB relationship and the voluntary
adoption of IR for companies with positive shareholders’ equity.
Girella et al. (2019) and Rizzi et al. (2019) reached significant results of associating MTB with
the measure used as an IR dependent variable. However, the studies by García-S
anchez et al.
(2013) and Frias-Aceituno et al. (2014) have failed to confirm this assumption.

3.5 Manufacturing industry

The industry variable also refers to the company’s particular characteristics, after all, it is
assumed that companies from different sectors present divergent trends in the way they
report their activities. Especially because the risks associated with the industry and services
sectors, for example, are differentiated. The activities of manufacturing companies can
directly affect society, as well as the environment. As a result, the regulatory pressure from
governments and stakeholders themselves is greater (Girella et al., 2019).
The corporate image is closely linked to performance and information dissemination in
the field of social responsibility (Prado-Lorenzo and Garcia-Sanchez, 2010). For this reason,
reputation can be a stimulus for manufacturing industries to publicize IR, capitals as natural
have an important social role for the entity to show how it uses, consumes and reuses the
natural resources it needs to carry out its core activity.
JFRA As a result, stakeholders are expected to put pressure on the company to obtain more
20,3/4 information, reducing agency costs. In addition, taking into account competition in the
sector. “It is possible that if a company starts to adopt IR, others also do it, reflecting
pressure from stakeholders for better disclosure practices.” Thus, the fifth hypothesis has
been defined:

H5. There is a positive relationship between the manufacturing industries and the
456 voluntary adoption of IR.
Tagesson et al. (2009) found a strong relationship between industry and disclosure of the
sustainability report. As for the IR, Frias-Aceituno et al. (2014) and Lai et al. (2016) did not
find significant results when relating a specific sector, as well as the Brazilian studies by
Ricardo et al. (2017) and Rizzi et al. (2019). Contrary to Girella et al. (2019), who showed a
negative and significant relationship, also signaling a certain level of controversy regarding
this issue.

3.6 Size of the board of directors

This variable, as well as the next two, are variables that aim to capture aspects of corporate
governance, through the characteristics of the boards of directors. Thus, according to
Johnson et al. (2013), the characteristics, competencies and experiences that individual
directors bring to the decision-making process are related to the companies’ human capital.
Fiori et al. (2016, p. 91) highlight that “effective corporate governance mechanisms can
reduce agency costs, information asymmetries and opportunistic behavior.” Jensen and
Meckling (1976) emphasize the link between the internal mechanisms of corporate
governance and the disclosure of information.
According to the empirical evidence of Frias-Aceituno et al. (2013), Fiori et al. (2016) and
Girella et al. (2019) who found a significant positive relationship between the size of the
board of directors and the adoption of IR, the following hypothesis is suggested:

H6. There is a positive relationship between the size of the board and the voluntary
adoption of IR.
Therefore, this hypothesis is based on the assumption that the company with the largest
board offers greater knowledge and expertise, as well as greater sharing of activities and
monitoring capacity, instead of increasing the problems of friction and communication
between the members of the Board (Larmou and Vafeas, 2010).

3.7 Gender diversity on the board of directors

When investigating the percentage of women present on the board, it is intended to relate
the non-financial disclosure to the presence of women on the board, due to their more
developed sensitivity regarding the transparency of information, especially of questions
about sustainability, as exposed in the studies by Barako and Brown (2008) and Prado-
Lorenzo and Garcia-Sanchez (2010).
In addition, the multidimensional nature of the report and the connectivity of the
information disclosed requires contributions from directors with different experiences. From
another perspective, Marrone (2020) affirms that women are better prepared for board
matters and contribute to forming alliances.
In this context, Frias-Aceituno et al. (2013) and Fiori et al. (2016) found a significant
positive relationship between this variable and the IR, empirical evidence opposite to the
study by Girella et al. (2019) that was not significant. However, Marrone (2020) found that
companies with more women on the board are more likely to produce an integrated report Integrated
more in line with IIRC requirements. Therefore, the seventh hypothesis is as follows: report in Brazil
H7. There is a positive relationship between the level of participation of women on the
board and the voluntary adoption of IR.

3.8 Independent directors on the board of directors 457

“The greater the proportion of non-executive directors on the board, the more effective the
role of monitoring managerial opportunism” (Fiori et al., 2016, p. 95). Thus, it is based on the
idea that the incentive will be greater to disclose information, ensuring greater transparency
for the company and protecting the interests of shareholders. Therefore, the following
hypothesis was made:

H8. There is a positive relation between the level of participation by independent

directors on the board and the voluntary adoption of IR.
The empirical results of this variable in the studies by Frias-Aceituno et al. (2013), Fiori et al.
(2016) and Girella et al. (2019) were not significant.

4. Design of the study

4.1 Research data
The study analysis period was chosen, taking into account CVM Instruction n. 552/14,
which amended CVM Instruction n. 480/09 and made it mandatory to disclose socio-
environmental information in the Reference Form as of 2016. CVM Instruction n. 552/14 also
determines that the following be specified: the methodology used, whether the information is
audited or reviewed by an independent entity, including the page where this information
will be found. Furthermore, 2019 is the last year in which the necessary information for
research is available.
The population is made up of the more than 350 shares listed on [B]3. Of these, state-
owned companies were excluded, given that the research aims to investigate the factors
associated with voluntary disclosure and Law n. 13303/2016 started to demand the annual
disclosure of the integrated or sustainability report by Brazilian state-owned companies.
Financial sector companies were also excluded because of specific characteristics such as
high leverage and differentiated accounting standards. Therefore, the final non-probabilistic
sample is composed of 227 listed companies that had data available for carrying out the
study in a total of 875 observations.
It is worth mentioning that the integrated report itself is not a report, but guidelines on
the reporting process, so the report would be the final object of the application of IR. Thus,
some companies listed in [B]3, even preparing their reports based on IIRC guidelines and
given the non-mandatory adoption of IR, can present their reports with another
nomenclature, being more common: “sustainability reports,” “integrated reports” and
“annual reports.”
In this case, for the survey of companies that adopted IR, all non-financial reports
released by the company were consulted, which specify in the text that the company adopts
the IIRC guidelines for the 2016–2019 period.
Otherwise, although the focus of this study is IR, we also seek insights on advances in
informational dissemination, that is, reports similar to IR, but which do not adopt or
partially adopt the IIRC guidelines. Table 2 reports the frequency of observations
categorized in the sample.
JFRA For data collection, the BloombergV
R data platform was used. The gaps and other

20,3/4 information not covered by the database were extracted from the Reference Forms
and the standardized financial statements filed on the CVM website. Table 3
presents the search codes used in the BloombergV R platform to assist in data

collection.

458 4.2 Econometric model

The structure of the econometric models was based on the empirical findings shown in the
works Girella et al. (2019), Rizzi et al. (2019), Ricardo et al. (2017), Fiori et al. (2016), Lai et al.
(2016), Frias-Aceituno et al. (2014), Frias-Aceituno et al. (2013) and García-S
anchez et al.
(2013), timely presented during the development of the hypotheses and definition of the
objective to be accomplished by this paper.
As displayed in Table 1, the previous empirical literature on IR, listed in this study,
established qualitative dependent variables and resorted to models such as probit (Fiori
et al., 2016), binomial logistic regression with cross-sectional/pooled data (Girella et al., 2019;
Ricardo et al., 2017) and panel data with random effects (Ricardo et al., 2017; Lai et al., 2016;
García-S
anchez et al., 2013), that is, previous studies not exhausted all possibilities of
applying logistic regression, considering that applications with polytomous categorical
dependent variable have not been observed, signaling the methodological gap that this work
intends to fill.
Assuming the choices of companies:

report voluntary information structured in accordance with IR;

provide voluntary disclosure available through intermediary structured reports of a
non-financial nature similar to IR (e.g. sustainability report) or;

not to report (voluntarily) structured information of a non-financial nature.

Therefore, the studied phenomenon covers all available possible choices and offers three
possibilities of answers through a polytomous categorical dependent variable that
represents:

Categories Frequency (%)

Table 2. Observations that disclose according to the IR 107 12.23
Frequency of Observations with reports similar to the IR 237 27.09
observations of the Observations without non-financial reports 531 60.68
dependent variable Total 875 100.00

Item Search code BloombergV

R

Total assets BS_TOT_ASSET

Profitability IS_EBIT
Leverage TOT_DEBT_TO_TOT_ASSET
Table 3. Market-to-book PX_TO_BOOK_RATIO
Search code for data Board size BOARD_SIZE
collection at Percentage of women on the board PCT_WOMEN_ON_BOARD
BloombergV R Percentage of independent directors on the board PCT_INDEPENDENT_DIRECTORS
 (1) Category 2 – companies that disclose according to the IR (y = 2); Integrated
(2) Category 1 – companies with reports similar to the IR (y = 1); and report in Brazil
(3) Category 0 – companies without non-financial reports (y = 0).

The proposal to work with the polytomous categorical dependent variable can be considered
as another innovative point in the analysis process and allows to signal the factors
associated with the voluntary disclosure of the IR in Brazil, capturing the effects of the 459
voluntary disclosure of other types of reports non-financial. The factors (independent
variables) to explain the odds of adopting IR are:
SIZE, captures the effect of company size; PROF, considers the profitability of the business by the
return on the assets of the company; LEV, contemplates the effect of funds that companies have
received from providers of financial capital; IND, considers the likelihood of the industrial sector
being forced to produce more non-financial reports (sustainability, environmental, etc.) and,
consequently, the IR; BOARDSIZE, computes the board size effect; WOMEN, includes the impact
of gender diversity on the board; INDEP, incorporates the influence of independence on the board
e; MTB, captures the effect of business growth opportunities by the company’s MTB value.
Table 4 links each variable related to the previous literature, justifying the choice of explanatory
variables.
Regarding the explanatory econometric model, which uses the polytomous categorical
dependent variable, the logit model was chosen with a multinomial approach and data from
2016 to 2019. For such a model, the available alternates for the dependent variable of the
multinomial logistic regression are: pooled and; panel data with random effects (Wooldridge,
2010, 609–619), capturing such effects in the intercept to account for the unobserved
heterogeneity or spurious dependence among observations in the search for a more robust
solution.
This work is based on assumptions compatible with the multinominal logistic regression
that Stata software package release 15.0 can solve, confronting all available alternates and
deciding on the most robust. A similar choice process has already been used in Machado and
Gartner (2018) when investigating the occurrence of corporate fraud in Brazilian banking
institutions, being expanded and adapted to investigate the factors associated with the
voluntary disclosure of the integrated report in Brazil, as shown in Figure 1.
Unfortunately, it was not possible to calculate the MTB variable in 231 (26.4%)
observations, due to the unavailability of data and the number of companies with negative
equity. This reduction in the number of observations prevented estimating the multinomial
logistic regression in a panel with random effects for the econometric model with MTB
(restriction in the matrix conformability), in this sense, only pooled model was estimated to
exclusively test H4 and in a more limited set of companies (specific model).
Remaining hypotheses will be tested by the model without MTB (main model),
contemplating 875 observations and being chosen by the robustness criterion, regarding the
assumption to be used: pooled (traditional model) or panel data with random effects.
Therefore, the comparison that will point out the most adequate model from the statistical
point of view between the multinomial logit models, traditional and with random effect will
be performed by the analysis of the Akaike information criterion (AIC), Schwartz Bayesian
information criterion (BIC) and Likelihood-ratio test (LRT). Figure 1 shows the diagram for
choosing the explanatory econometric model and the links with the H1, H2, H3, H5, H6, H7
and H8.
The formal statement of the model multinomial logistic regression can be written as
(Long and Freese, 2001):
 460
JFRA
20,3/4

variables
Table 4.
Description of the
Variables Metric Reference

Integrated reporting (Y) Polytomous categorical dependent variable:
Category 2 – companies that disclose
according to the IR (Y = 2); Category 1 –
companies with reports similar to the IR (Y
= 1); Category 0 – companies without non-
financial reports (Y = 0)
Size (SIZE) Natural logarithm of the book value of total
assets (measured in ln)
Profitability (PROF) Earnings before interest and taxes divided
by the average of the book value of total
assets (measured in %)
Leverage (LEV) Book value of total interest-bearing
liabilities divided by the book value of total
assets (measured in multiplier)
Market-to-book (MTB) Market value divided by the book value of
equity (measured in multiplier)
Industry (IND) Company classified as the manufacturing
industry, where 1 = this type of industry
and 0 otherwise (dummy)
Board size (BOARDSIZE) Number of board members (measured in
quantity)
Gender diversity on the Number of women on the board divided by
board (WOMEN) the number of board members (measured in
%)
Independent directors on Number of independent directors on the
the board (INDEP) Board divided by the number of board
members (measured in %)
Dependent variable of interest, proposed
by the authors
Linked to the Expected signal in relation to:
hypothesis Hypothesis Odds
Girella et al. (2019), Rizzi et al. (2019); H1 Effect on IR As the outcome is (Y = 2):
Ricardo et al. (2017), Lai et al. (2016) and adoption (þ) () for (Y = 0) () for (Y = 1)
Frias-Aceituno et al. (2014) Where (Y = 1) > (Y = 0) -
Girella et al. (2019), Ricardo et al. (2017); H2
Lai et al. (2016) and Frias-Aceituno et al.
(2014)
Girella et al. (2019) and Lai et al. (2016) H3
Girella et al. (2019), Rizzi et al. (2019); H4
Frias-Aceituno et al. (2014) and García-
S
anchez et al. (2013)
Girella et al. (2019), Rizzi et al. (2019); H5
Ricardo et al. (2017), Lai et al. (2016); Frias-
Aceituno et al. (2014) and Tagesson et al.
(2009)
Girella et al. (2019), Fiori et al. (2016) and H6
Frias-Aceituno et al. (2014)
H7
H8
 Prðy ¼ mjxÞ Integrated
ln Xmjb ðxÞ ¼ ln ¼ x b mjb for m ¼ 1 to J
Prðy ¼ bjxÞ report in Brazil
Considering the proposed formulation, b is the base category (outcome = category 2 or
y = 2). As ln Xbjb ðxÞ ¼ ln1 ¼ 0, must contain b bjb , therefore the log odds of a given
result, compared to itself and the effects of any independent variables are equal to 0
(refers to the case of the outcome). J, is the number of equations to be solved to obtain 461
the results of the predicted probabilities (three = number of categories, which result in
two equations with results = 0).
The predicted probability is the same, regardless of category b chosen, however, the
result obtained by the procedure gsem of Stata 15.0, using the same logic for capturing
the random effects proposed by Pope (2014), was decisive for the choice of category 2
(y = 2) an outcome, due to being the only reference base that was successful in finding
a convergent response in the procedure, supposedly because it corresponds to the
group with the lowest number of observations. In this sense, Category 2 – disclosure in
accordance with IR (b = y = 2) is the reference category (outcome) and two vectors of
explanatory variables will be defined with the respective estimated parameters, that is,
two logits ( b^ 0j2 and b
^ 1j2 , where b 2j2 = 0. Therefore, Prðy ¼ mjxÞ can be written as
(Long and Freese, 2001):


exp x b mj2
Prðy ¼ mjxÞ ¼ J
P

exp x b jj2
j¼1

Therefore, the proposed econometric models, according to the dependent variables

described in Table 4 and considering Category 0 (m = y = 0), Category 1 (m = y = 1) and
Category 2 (b = m = y = 2) is estimated by:
Specific models:

ln X0j2 ðxit Þ ¼ b 0; 0j2 þ b 1; 0j2 SIZEit þ b 2; 0j2 PROFit þ b 3; 0j2 LEVit þ b 4; 0j2 INDit

þ b 5;0j2 SIZEBOARDit þ b 6; 0j2 WOMENit þ b 7; 0j2 INDEPit

þ b 8; 0j2 MTBit

ln X1j2 ðxit Þ ¼ b 0; 1j2 þ b 1; 1j2 SIZEit þ b 2;1j2 PROFit þ b 3;1j2 LEVit þ b 4;1j2 INDit
þ b 5;1j2 SIZEBOARDit þ b 6;1j2 WOMENit þ b 7;1j2 INDEPit þ b 8;1j2 MTBit

Main models:

ln X0j2 ðxit Þ ¼ b 0; 0j2 þ b 1; 0j2 SIZEit þ b 2; 0j2 PROFit þ b 3; 0j2 LEVit þ b 4; 0j2 INDit

þ b 5;0j2 SIZEBOARDit þ b 6; 0j2 WOMENit þ b 7; 0j2 INDEPit

JFRA ln X1j2 ðxit Þ ¼ b 0; 1j2 þ b 1; 1j2 SIZEit þ b 2;1j2 PROFit þ b 3;1j2 LEVit þ b 4;1j2 INDit
20,3/4 þ b 5;1j2 SIZEBOARDit þ b 6;1j2 WOMENit þ b 7;1j2 INDEPit

Table 4 shows the description, rationale, as well as the link with the hypotheses and
expectation of the signs of all the variables involved in the econometric process, however,
the definition of category 2 to be the outcome puts the disclosure of the IR as a reference,
462
therefore, the expected signs for the odds, they are contrary to those expected by the
hypotheses, given that it is assumed that categories 1 and 0 would be associated with the
lowest results.
Based on the maximum likelihood estimation, the coefficients cannot be interpreted in
terms of marginal effects, the model will report odds ratios that transform the regression
coefficients, allowing us to understand in percentage terms the contribution of each of the
regressors to the probability estimate. Only the assumption of the absence of
multicollinearity of the explanatory variables should be observed when estimating logistic
regression models. Multicollinearity will be tested by the variance inflation factor (VIF) and
analysis of bivariate correlations.
To estimate the models, standard errors clustered (cluster robust) by industry will be
used, as suggested by Girella et al. (2019), Ricardo et al. (2017) and Lai et al. (2016). The
Hosmer-Lemeshow test will validate the quality of the fit of the final model, through the
deciles of the probabilities estimated by the last model generated, dividing the database into
10 parts, from then on, a x 2 test is elaborated for each group to check if there are significant
differences between the observed and expected frequencies.

5. Results and discussions

5.1 Descriptive analysis
Table 5 reports the descriptive statistics of the quantitative independent variables. The
highest averages of the size variable belong to groups Y = 1 and Y = 2. The group of
companies that adopt IR (Y = 2), have the smallest standard deviations, indicating that they
have a more consistent behavior compared to the other groups.
At a general level, based on the PROF and MTB averages, it is evident, respectively, low
numbers of profitability in relation to total assets and the extent to which companies are still
little valued by the market in relation to their book value. It is noted that both variables in
the reports that adopt the IR (Y = 2) have significantly better and lower averages than the
other groups.
In general, the descriptive results show that the average percentages of women
participating in the board of directors travel only in the range between 12.18% and 8.80%,
according to each category. With regard to the participation of independent directors on the
board of directors, the average percentages are between 40.45% and 23.70%.

5.2 Logistic regressions

The correlations shown in Table 6 range from weak to negligible, together with VIFs much
less than 10, shown in Table 7, indicate the absence of multicollinearity between the
independent variables of the model. The models are validated by the Hosmer-Lemeshow
test, Table 7 ( x 2 = 20.927 j p = 0.181 and x 2 = 22.162 j p = 0.138) show the p-value above
0.05, showing the suitability of the logistic regressions performed, as it does not reject the
null hypothesis of the test and, thus, there are no statistically significant differences between
the predicted and the real.
 With MTB Without MTB
Integrated
Category Variable Obs Mean SD Obs Mean SD report in Brazil
All SIZE 644 8.0955 1.8266 875 7.5008 2.1690
PROF 644 5.8770 10.4294 875 2.3327 31.0243
LEV 644 0.2913 0.1884 875 0.5595 2.4918
IND 644 0.4922 0.5003 875 0.4949 0.5003
BOARDSIZE 644 7.0031 3.1262 875 6.4286 3.2789 463
WOMEN 644 11.0435 16.2621 875 11.0551 17.5119
INDEP 644 29.4178 25.2715 875 25.3448 25.1837
MTB 644 3.0618 6.9992
Y=2 SIZE 103 9.4852 1.1842 107 9.4848 1.1627
PROF 103 8.4040 4.4007 107 8.5081 4.3803
LEV 103 0.3906 0.1863 107 0.4020 0.1948
IND 103 0.4563 0.5005 107 0.4393 0.4986
BOARDSIZE 103 8.5728 3.3095 107 8.5327 3.2918
WOMEN 103 11.9613 12.7874 107 11.8257 12.5975
INDEP 103 40.4517 21.6614 107 40.2894 21.6650
MTB 103 3.9151 3.1991
Y=1 SIZE 210 9.1422 1.4019 237 9.1680 1.3988
PROF 210 6.7203 6.9441 237 6.0650 8.9473
LEV 210 0.3433 0.1865 237 0.3549 0.1939
IND 210 0.4952 0.5012 237 0.4641 0.4998
BOARDSIZE 210 8.1286 2.7803 237 8.2405 2.9938
WOMEN 210 8.7993 11.5196 237 8.3579 11.2020
INDEP 210 33.0157 24.7133 237 32.2854 25.3655
MTB 210 2.9891 4.2880
Y=0 SIZE 331 6.9990 1.5223 531 6.3569 1.8076
PROF 331 4.5557 13.0850 531 0.5775 39.0555
LEV 331 0.2274 0.1659 531 0.6825 3.1900
IND 331 0.5015 0.5008 531 0.5198 0.5001
BOARDSIZE 331 5.8006 2.7813 531 5.1959 2.7724
WOMEN 331 12.1816 19.3891 531 12.1036 20.3377
INDEP 331 23.7017 25.1705 531 19.2356 23.6952 Table 5.
MTB 331 2.8424 8.9647 Descriptive statistics

Variables SIZE PROF LEV MTB SIZEBOARD WOMEN INDEP

SIZE 1.0000
PROF 0.2690* 1.0000
LEV 0.1599* 0.0048 1.0000
MTB 0.0907 0.0878 0.0108 1.0000
SIZEBOARD 0.5810* 0.1304* 0.1061* 0.0560 1.0000
WOMEN 0. 2016* 0.0208 0.0548 0.0486 0.0811* 1.0000
INDEP 0.4177* 0.0711 0.0252 0.0419 0.1901* 0.1258* 1.0000
Table 6.
*
Note: Statistically significant at 5% Bivariate correlations

Figure 1 indicates the analysis of the AIC, BIC and LRT test, the parameters for comparative
evaluation of performances and robustness of the two structures of explanatory models
without MTB (Main model): Pooled multinomial logistic regression (traditional) or
Multinomial logistic regression with random effects (panel data). Table 7 show that the AIC
 464
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20,3/4

Table 7.
Results of
econometric models
Companies that disclose according to the IR is the base outcome (Y = 2)
Explanatory models
Explanatory model with without MTB
MTB (specific models) (main models)
Multinomial logit Multinomial logit
simple pooling panel with random effects
Companies without Companies with Companies without Companies with Companies without Companies with
non-financial reports similar to non-financial reports similar to non-financial reports similar to
Assumptions reports (Y = 0) the IR (Y = 1) reports (Y = 0) the IR (Y = 1) reports (Y = 0) the IR (Y = 1)
variables and tests Coefficient Coefficient Coefficient Coefficient Coefficient Coefficient

SIZE 1.1312*** 0.1707 1.3194*** 0.1764 4.5675*** 0.2096

(0.1235) (0.1378) (0.1017) (0.1555) (1.0756) (0.3991)
PROF 0.0613*** 0.0565*** 0.0263*** 0.0348*** 0.0736*** 0.0857***
(0.0123) (0.0204) (0.0088) (0.0057) (0.0239) (0.0075)
LEV 2.8390* 1.7921 0.1203* 0.8010 0.0287 1.0800
(1.5401) (1.1755) (0.0659) (0.5142) (0.7363) (1.6641)
IND 0.1437*** 0.1528*** 0.0895*** 0.0993*** 0.2182 0.8460***
(0.0244) (0.0100) (0.0039) (0.0186) (0.2082) (0.3074)
BOARDSIZE 0.1564 0.0318*** 0.1479 0.0161*** 0.2150 0.0861
(0.1088) (0.0097) (0.0935) (0.0055) (0.1543) (0.0638)
WOMEN 0.0393*** 0.0273*** 0.0299** 0.0289*** 0.0878*** 0.0691***
(0.0029) (0.0073) (0.0087) (0.0039) (0.0132) (0.0206)
INDEP 0.0179** 0.0161*** 0.0172*** 0.0142*** 0.0259*** 0.0304***
(0.0075) (0.0058) (0.0081) (0.0051) (0.0049) (0.0106)
MTB 0.0217*** 0.0098***
(0.0048) (0.0025)
Constant 14.2999*** 4.49390*** 14.5421*** 3.88219*** 47.2331*** 1.67055
(1.9357) (0.6165) (1.1465) (1.0436) (10.5082) (3.8359)
cov(RI0[id],RI1[id]) 25.3974**
(10.5971)
Observations 644 875
VIF 1.26 1.28
HL test x 2 = 20.927 j p = 0.181 x 2 = 22.162 j p = 0.138
Log likelihood 460.1257 515.3630 279.0766
AIC 922.2514 1,032.7260 562.1533
BIC 926.7191 1,037.5000 571.7017
LR test x 2 = 472.57 j p > x 2 (01:02) = 0.000
(calculated with the estimates without standard errors clustered by industry)

Notes: standard errors in brackets. ***p < 0.01; **p < 0.05; *p < 0.1, Impossible to estimate the multinomial logistic regression with random effects in the MTB
model, due to restriction in matrix conformability
(Po = 1,032,726; Re = 562.1533) and BIC (Po = 1,037.5; Re = 571.7017) for the structure with Integrated
random effects are much smaller than in the pooled structure, therefore, the one with report in Brazil
random effects has better performance.
Furthermore, the LRTPo:Re (pooled vs random effects) resulted in x 2 = 472.57 with
significant p > x 2 at 1%, indicating the model with restrictions (random effects) as the most
appropriate. In this sense, all criteria recommend the use of the Multinomial logit panel with
a random-effects model with better performance and robustness to respond to H1, H2, H3,
465
H5, H6, H7 and H8. It is worth mentioning that cov(RI0[id],1[id]) is significant at 1%,
signaling the existence of an underlying correlation between the two random intercepts,
which consolidates the efficiency of the model.
Table 7 shows that AIC and BIC of the model with random effects were also lower than
those obtained by the explanatory model with MTB, reinforcing the methodological decision
of using the model with MTB, specific to answer H4
As evidenced in the methodology, the definition of Category 2 to be the outcome puts the
disclosure of the IR as a reference. Hence, from the data in Table 7, it is possible to infer that
there are no statistical differences between the sample of Companies with reports similar to
the IR (Y = 1) compared to companies that voluntarily disclose the IR (Y = 2). Consequently,
H1 in which the size of companies would be positively associated with voluntary adoption
of IR is rejected.
The results also demonstrate, at the 1% significance level, the probability of smaller
companies less disclosing the IR report or similar. This result is consistent with the
research by Ricardo et al. (2017), who jointly analyzed the probability of publishing
the sustainability report or report integrated by the companies listed at the time on the
BM&Fbovespa.
The H2 cannot be rejected, as the PROF was significant in relation to both Y = 0 and Y =
1, inclusive, the negative sign demonstrates that the greater the profitability, the more
voluntary disclosure of RI. It attests that companies with excellent financial perspectives,
instead of retaining information, have a greater incentive to signal good results to investors
and differentiate themselves from less successful ones. Thus, it is understood that the
benefit of signaling and mitigating information asymmetries, mainly attributable to adverse
selection, outweighs the additional cost required in preparing the IR.
Girella et al. (2019), who obtained the same result, then discard the possibility of
impression management, as suggested by the legitimacy theory. Which underperforming
companies need to adopt this type of report to achieve legitimacy. Frias-Aceituno et al.
(2014) also had profitability with a significant positive effect, however, only at the 90%
confidence level.
The LEV variable was not significant in Table 7. Therefore, H3 is rejected, attesting to
the idea that the adoption of IR is not strongly influenced by the dependence on third-party
resources of an onerous nature, even with the evidence of greater risk for investors, due to
indebtedness. This result is in agreement with Lai et al. (2016) and Girella et al. (2019).
For the analysis of the MTB variable, as already mentioned, multinomial logistic
regression is considered under the pooled structure. The companies most valued by the
market showed a statistically significant positive relationship with the disclosure of the IR.
Therefore, it does not reject H4.
This means that the company’s future value creation opportunities, represented by the
surplus between the market value and the book value of shareholders’ equity, drive the
publication of IR. The result suggests that the costs involved in preparing the report do not
outweigh the benefits for these companies.
JFRA The IND was not significant in the panel model. Thus, H5 is rejected. Similar result to the
20,3/4 studies by Frias-Aceituno et al. (2014); Lai et al. (2016), Ricardo et al. (2017) and Rizzi et al.
(2019) who did not find significant results when relating a specific sector.
Adversely, this result points out, at the 1% level of significance, that the manufacturing
industries are more likely to release reports similar to the IR. Thus, it is up to regulatory
pressure and stakeholders to demand information. Frias-Aceituno et al. (2014) conclude that
466 industries, especially, in monopoly positions tend to disclose less information, to preserve
the abnormal profits obtained.
In the field of corporate governance variables, only BOARDSIZE was not significant.
Therefore, H6 can be rejected. The board of directors classified as large, with different
people, has greater specialization and knowledge, allowing the discussion of different topics,
but at the same time, it can increase the problems of friction and communication between the
members of the Board. This variable was significant in the studies by Frias-Aceituno et al.
(2013), Fiori et al. (2016) and Girella et al. (2019).
Finally, the main difference of this study carried out in an emerging economy for
research carried out in other countries (Frias-Aceituno et al., 2013; Fiori et al., 2016; Girella
et al., 2019) was the significance of the variables: level of participation women on the board
(after the framework) and independent directors. Soon the importance of corporate
governance is demonstrated in the Brazilian reality of the implementation of IR, proving
that the corporate changes happen more internally than externally, therefore it is necessary
the due attention to the boards of directors.
The level of participation of women on the board of directors was also positive and
significant, proving that, even with the percentage of women participating on the boards
being relatively low in [B]3 companies, it is still possible to capture the influence of women in
the adoption of IR. Confirming what was exposed by Barako and Brown (2008) and Prado-
Lorenzo and Garcia-Sanchez (2010), where they cite the most developed sensitivity of
women, regarding issues that are not financial such as sustainability.
Therefore, H7 of the variable WOMEN is not rejected and the importance of behavioral
analysis and gender policies is revealed. This result was corresponding with Frias-Aceituno
et al. (2013) and Fiori et al. (2016). Studies that have samples between the years 2008 to 2011,
that is, the framework had not even been published yet and companies from that last year
belonged to the so-called Pilot Program IIRC, which aimed to collect feedbacks about IR.
The presence of independent directors has a positive and significant effect on IR.
Differently, from international studies by Frias-Aceituno et al. (2013), Fiori et al. (2016) and
Girella et al. (2019) that did not show statistical significance. Thus, the H8 of the INDEP
variable cannot be rejected.
In this case, through econometric findings, it is possible to infer that in Brazil the
independence of the board, considered an essential mechanism to control the actions of
managers and guarantee shareholder goals (Fama and Jensen, 1983), increases the level of
transparency and integration of corporate information. As, independence from management
makes these directors’ actions more objective to the company’s interests (Frias-Aceituno
et al., 2013).
The fact that the variables profitability, participation of women on the board and
independent directors have given significance in all models of IR adoption, confirms what
was stated by Vitolla and Raimo (2018, p. 248): “the pressures of external stakeholders are
not enough, but it is necessary that the change begins within the company, through a culture
focused on sustainability and transparency.”
Finally, considering also the analysis of the results of the multinomial logistic regression
in a panel with random effects, it was evidenced that the companies adhering to reports
similar to the IR are associated with lower chances of profitability and independent of the Integrated
board. Only on the issue of diversification of the board, that the probabilities observed by report in Brazil
these companies are slightly better than those that do not adhere to non-financial
publications.

6. Conclusions
In this study, the factors associated with voluntary disclosure of IR in Brazil were 467
investigated. Taking into account the postulates of agency and stakeholder theories, the
sample was comprised of the companies listed in [B]3, excluding companies in the financial
sector and state-owned companies.
The analysis in the period from 2016 to 2019 of the 227 publicly traded companies,
allowed the identification of common characteristics of IR adopters. Profitability, the level of
participation of women, independent directors and the MTB were positively significant and,
therefore, associated with the voluntary adoption of IR by publicly traded companies [B]3.
The analysis in the period from 2016 to 2019 of the 227 publicly traded companies
allowed the identification of common characteristics of IR adopters. Profitability, the level of
participation of women, independent directors and the MTB were positively significant and,
therefore, associated with the voluntary adoption of IR by publicly traded companies [B]3.
The use of multinomial logit regression with random effects fills a methodological gap in
this international literature, highlighting the unprecedented result of the importance of the
participation of women in the Board of Directors (a fact that was only possible to verify in
studies with samples of companies prior to the framework) and of advisors independent.
We understand that the consolidation of the findings mentioned at this point, filled in the
gaps introduced and fulfilled the originality requirements, first, by enabling the three-
dimensional comparative analysis: companies that adopted the IR framework; companies
that have adopted reports similar to IR and; companies that have not adopted the
publication of non-financial information. Second, for incorporating the board’s
characteristics into the explanatory econometric model.
The comparative analysis in three dimensions showed that companies that are adept at
reporting similar to IR are associated with lower profitability. In this same direction,
combining three-dimensional analysis with the incorporation of the board’s composition, the
lower odds linked to the board’s independence are also associated with these same
companies. Only in the matter of diversification of the board, that the probabilities observed
by the companies that adhere to reports similar to the IR are slightly better than those that
do not adhere to non-financial publications.
These findings can also serve for practical referrals and political implications such as the
study draw attention to the fact of Law n.13303/16 (State-owned enterprises Law) oblige the
disclosure of the IR or sustainability report, however, even though our sample does not
include State-owned enterprises, the study with [B] 3 companies suggests a certain level of a
disincentive to publish the IR when another similar report is published.
Another practical implication of the study arises from the conception that the policies of
gender diversification and independence of the board could boost the number of companies
adhering to the IR framework and Brazil walking in the same trajectory of majority
disclosure observed in Japan and Sri Lanka.
From a theoretical point of view, in addition to contributing to the IR literature, through
the investigation of emerging reality, the choice of two theories highlights the connectivity
of information of a different nature from IR, as the choice of a particular theory could limit
the potential results to be found (Girella et al., 2019).
JFRA In terms of institutional policies, the insights from this study may assist the International
20,3/4 Integrated Reporting Council (IIRC), to improve strategies for expanding the implementation
of the integrated report for other non-adopting companies. Likewise, the government, based
on the benefit of the control and transparency provided by the IR, as pointed out by Frias-
Aceituno et al. (2013), may also be based on the results of this study for the development of
incentive strategies for IR.
468 A limitation of the research is the impossibility of calculating, approximately, a quarter
of the observations of the MTB variable, due to the unavailability of data and the number of
companies with negative equity. Because of this, it was decided to run models: with MTB
and without the variable, so that the interpretation could be done by the most robust.
In this sense, the gap caused by this process of exclusion of observations, mainly due to
the fact that they present negative equity and make it impossible to calculate the MTB may
be targeted for future research.

Notes
1. 16%  70%.
2. 16%  30%.

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Corresponding author
Ruhama Bezerra Fernandes can be contacted at: ruhama.bezerra@gmail.com

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