Received: 13 May 2019 Revised: 2 August 2019 Accepted: 19 August 2019

DOI: 10.1002/csr.1850

RESEARCH ARTICLE

How pressure from stakeholders affects integrated reporting

quality

Filippo Vitolla | Nicola Raimo | Michele Rubino | Antonello Garzoni

Department of Economics and Management,

University LUM Jean Monnet, Casamassima, Abstract
Italy Integrated reporting (IR) is considered an innovative and effective reporting tool that
Correspondence includes financial and nonfinancial information. Recently, there has been a heightened
Filippo Vitolla, S.S. 100 Km 18 Casamassima, emphasis on IR from both academic and professional viewpoints. However, despite
(BA),70010, Italy.
Email: vitolla@lum.it the importance of stakeholders in the practice of IR, their impact on the report
drafting process has not been analysed in any study. Therefore, this study aims to fill
this gap by analysing the relationship between stakeholders' pressure and IR quality.
On the basis of the stakeholder theory, this study uses a regression model to demon-
strate how the IR quality is significantly and positively associated with the stake-
holders' pressures. Specifically, results of this study indicate that pressures from
customers, environmental protection organizations, employees, shareholders, and
governments determine the IR quality. To the best of our knowledge, this is the first
study that investigates stakeholders' pressure as a determinant of IR quality.

K E Y W OR D S

disclosure, IIRC, integrated reporting, stakeholder pressure, stakeholder theory

1 | I N T RO D U CT I O N
An increase in the relevance of nonfinancial disclosure, in general, and
integrated reporting (IR), in particular, relates to two closely interlinked
aspects: the marked criticality of stakeholder relationships in ensuring
the medium‐ and long‐term success of a company and the growing
importance of voluntary disclosure models. Concerning the first
aspect, the environment in which companies operate has been radi-
cally changed by several factors such as globalization, citizens' sensi-
tivity to ecological issues, attention to human rights, financial
scandals, and national and international regulation of social and envi-
ronmental issues. These changes in the scenario in which companies
operate have driven the need to think about new business models
and to redefine processes, tools, and management models that will
help companies to achieve not only financial goals but also social
and environmental goals. The financial balance and the ability to
obtain competitive advantages and to create value in the short,
medium, and long terms are, consequently, closely connected with
the quality of managing relationships with different stakeholders
groups that bring the necessary skills and resources for conducting
business activities. This context leads to the second aspect in which
the analysis of nonfinancial disclosure becomes particularly relevant
—the strategic criticality of voluntary disclosure. The management of
communication activities has a significant impact on stakeholder rela-
tionships, and it is critical for the medium‐ and long‐term success in
terms of the extension of the company's stakeholders and their contri-
butions. In relation to the two aspects outlined above, this study aims
to analyse the impact of the stakeholders' pressure on IR quality. IR,
developed by the International Integrated Reporting Council (IIRC), is
a corporate reporting tool that resulted from the evolution of environ-
mental, social, and sustainability reports. It is a synthetic communica-
tion that illustrates how an organization's strategy, governance,
performance, and prospects allow it to create value in the short,
medium, and long terms (IIRC, 2013; Vitolla, Raimo, & Rubino,
2019a). IR is the result of a corporate communication process aimed
at providing investors with complete information on the financial
and nonfinancial aspects; with short‐, medium‐, and long‐term per-
spectives, this information aims at integrating and connecting the

Corp Soc Resp Env Ma. 2019;26:1591–1606. wileyonlinelibrary.com/journal/csr © 2019 John Wiley & Sons, Ltd and ERP Environment 1591
1592
various corporate information areas and aligning the internal and
external reporting processes. IR is designed to represent an organiza-
tion's dependence on different types of capitals and, consequently,
enable stakeholders to assess a firm's long‐term viability and more
effectively allocate scarce resources (Verschoor, 2011).
Recently, there has been a heightened emphasis on IR from both
academic (Velte & Stawinoga, 2017; Vitolla, Raimo, & De Nuccio,
2018) and professional viewpoints. Surveys by KPMG (2017) and EY
(2014) highlight how the practice of IR has been constantly growing
and evolving since the early adoption stages of the IR model.
This study aims to investigate how the pressure of the context in
which a company operates impacts the IR quality. In other words, this
study intends to assess whether IR represents the response of companies
to adapt to the information needs of different stakeholder groups; our
study also explores if IR is configured as a tool to improve transparency
in relationships and to promote credibility, trust, and legitimacy in the
context of reference in order to obtain the consent and approval of all
the stakeholders and not only the shareholders. The reference to the
concept of value creation referred to in the IIRC framework could imply
that IR represents a form of disclosure, albeit evolved, addressed exclu-
sively to the providers of financial capital (Flower, 2015). However, the
concept of value should be considered in a broad sense and should be
understood as a value for society, for present and future generations,
and for stakeholders (Kramer & Porter, 2011; de Villiers & Sharma,
2017; Badia, Di Cuonzo, Petruzzelli, & Dell'Atti, 2019). In this perspec-
tive, the creation of shared value is not in itself incompatible with value
generation for shareholders, where,the broader time horizon requires
to take into account, for the purposes of the success of the company,
the quality of the relations with the main categories of stakeholders
and the risks associated with the failure to include their expectations in
the strategic approach. The capacity to create shared value is closely con-
nected with the ability to achieve financial, social, environmental, and
governance performances simultaneously and to facilitate the achieve-
ment of synergies between the different dimensions of management.
However, despite the importance of stakeholders in the practice of
IR (Badia et al., 2019; Salvioni & Bosetti, 2014), their impact on the
report drafting process has not been analysed in any study.
Therefore, this study aims to bridge this gap by analysing the rela-
tionship between the pressure from five stakeholder groups (customers,
environmental protection organizations, employees, shareholders, and
governments) and the IR quality.
To this end, our study adopts a stakeholder theory perspective in
line with other contributions on the relationship between stake-
holders' pressure and nonfinancial disclosure (Dong, Burritt, & Qian,
2014; Fernandez‐Feijoo, Romero, & Ruiz, 2014; Huang & Kung,
2010; Liu & Anbumozhi, 2009; Prado‐Lorenzo, Gallego‐Alvarez, &
Garcia‐Sanchez, 2009).
This theory offers a way to interpret the adaptive behaviour of
companies in relation to the pressures exerted by stakeholders. In this
perspective, Freeman (1984) assessed the presence of a relationship
between organizations and different groups, besides the relationship
with shareholders. He proposed that stakeholders affect firms' actions.
Furthermore, Carroll (1991, p. 43) claimed that “there is a natural fit
VITOLLA ET AL.
between the idea of corporate social responsibility and an organiza-
tion's stakeholders.” Firms are motivated to disclose information to
their stakeholders to ensure that their behaviour is perceived legiti-
mate and to aid stakeholders' decision‐making. The key role of stake-
holders allows them to exert pressure on the company to obtain more
information.
The remainder of this article is organized as follows. Following the
literature review, the theoretical framework is presented. Subsequently,
we discuss our research hypotheses, present the methodology, and
elaborate on the results and discussion. In the last section, we draw
the conclusions.
2 | LITERATURE REVIEW
Despite IR being a relatively new concept, several areas of this topic
have already been explored (Vitolla, Raimo, & Rubino, 2019b). Scholars
focused mainly on the determinants (Frías‐Aceituno, Rodríguez‐Ariza, &
Garcia‐Sánchez, 2014; García‐Sánchez, Rodríguez‐Ariza, & Frías‐
Aceituno, 2013; Jensen & Berg, 2012) and the effects of IR (Barth,
Cahan, Chen, & Venter, 2017; Cosma, Soana, & Venturelli, 2018; Esch,
Schnellbächer, & Wald, 2019; Lee & Yeo, 2016; Martinez, 2016;
Pavlopoulos, Magnis, & Iatridis, 2019; Vitolla & Raimo, 2018).
Considering this study's objectives, literature analysis included
here focuses primarily on the determinants of IR and, in terms of
stakeholder theory, on the relationship between stakeholders' pres-
sure and nonfinancial disclosure.
Studies on the determinants of IR have analysed the impact of
financial, disclosure, governance, and country‐ and industry‐level
factors.
In relation to financial factors, Frías‐Aceituno et al. (2014) found
that a company's size and profitability positively affect the implemen-
tation of IR.
Regarding the aspects related to disclosure, Lai, Melloni, and
Stacchezzini (2016) found a positive relationship between environ-
mental, social, and governance disclosure ratings and the adoption of
IR, which implies that companies do not adopt IR merely to repair
the poor evaluation of their sustainability disclosure quality, whereas
Sierra‐García, Zorio‐Grima, and García‐Benau (2015) highlighted how
companies whose CSR reports are subject to assurance are more
inclined to adopt IR. Going beyond mere adoption, Bavagnoli, Songini,
Pistoni, and Minutiello (2018) showed a positive relationship between
assurance and IR quality, and Gerwanski, Kordsachia, and Velte (2019)
highlighted a positive impact of the assurance of nonfinancial informa-
tion on materiality disclosure quality in IR.
Other studies have analysed the impact of determinants related to
corporate governance, with particular reference to the board of direc-
tors and the audit and sustainability committees. Regarding the char-
acteristics of the board, Frías‐Aceituno, Rodriguez‐Ariza, and Garcia‐
Sanchez (2013) and Alfiero, Cane, Doronzo, and Esposito (2017)
highlighted how a large number of board members and the presence
of women in the board have a positive effect on the adoption of IR.
Finally, Gerwanski et al. (2019) found a positive relationship between
VITOLLA ET AL.
gender diversity and materiality disclosure quality. Regarding the role
of the audit committee, Velte (2018) highlighted how the expertise
of the latter improves the readability of the integrated reports, and,
similarly, Ahmed Haji and Anifowose (2016) found that both the effec-
tiveness and the authority of the audit committee and the number of
meetings encourage the inclusion of more information in integrated
reports and increase the level of compliance with the IIRC framework.
Finally, Ahmed Haji and Anifowose (2016) highlighted how the pres-
ence of a sustainability committee increases the amount of informa-
tion in the integrated reports and the level of alignment with IIRC
principles.
Another category of analysed determinants refers to country‐level
factors. In this regard, Frías‐Aceituno, Rodríguez‐Ariza, and García‐
Sánchez (2013) highlighted how companies located in civil law coun-
tries or in countries with a strong legal enforcement mechanisms are
more likely to publish integrated reports. García‐Sánchez et al. (2013),
instead, analysed the relationship between a country's cultural context
and the adoption of IR. Their study showed how organizations located
in countries with stronger collectivist and feminist values are more
inclined to integrate financial and nonfinancial information. Going
beyond mere adoption, Vitolla, Raimo, Rubino, and Garzoni (2019) and
Raimo, Zito, and Caragnano (2019) studied the impact of national cul-
ture on IR quality. The former highlighted how the quality of integrated
reports is positively associated with the degree of uncertainty avoid-
ance and negatively associated with the level of power distance, indi-
vidualism, masculinity, and indulgence. However, the latter, using a
different proxy for national culture, found that the IR quality is posi-
tively associated with assertiveness, institutional collectivism, uncer-
tainty avoidance, and humane orientation and negatively associated
with performance and future orientation. On a separate note, Bavagnoli
et al. (2018) found that the integrated reports provided by European
companies have a better quality.
The last category of analysed determinants refers to industry‐level
factors. In this regard, Frías‐Aceituno et al. (2014) found a negative
relationship between industry concentration and the production of
integrated reports.
Although different determinants have been analysed from previous
studies, there is a clear absence of contributions on the relationship
between stakeholders' pressure and IR.
Meanwhile, in terms of the stakeholder theory, the impact of
stakeholders' pressure has been studied in relation to other types
of nonfinancial disclosures. Of these, a few studies focused on envi-
ronmental disclosure. In this regard, Liu and Anbumozhi (2009) found
that government pressure positively affects the level of corporate
environmental information disclosure. However, Huang and Kung
(2010), using a sample of Taiwanese listed companies, revealed that
both external stakeholders, such as the government, environment,
debtors, competitors, and consumers, and internal stakeholders, such
as shareholders and employees, exert strong influences over man-
agement intentions regarding the extent of environmental disclosure.
Furthermore, the authors found a positive impact of the pressure of
intermediate stakeholder groups, such as environmental protection
organizations and accounting firms, on the environmental disclosure
1593
level. In this category, Liesen, Hoepner, Patten, and Figge (2015)
found that external stakeholders' pressure facilitates greenhouse
gas (GHG) emissions disclosure but not a complete GHG emissions
disclosure.
In the context of corporate social responsibility (CSR) disclosure,
Fernandez‐Feijoo et al. (2014) showed that the pressure from some
groups of stakeholders, such as customers, employees, environment,
and investors, improves the transparency of CSR reports. However,
Prado‐Lorenzo et al. (2009), using a sample of 99 Spanish listed com-
panies, provided evidence of the positive impact of governmental and
creditor pressures on the content and quality of CSR reports. In this
category, Dong et al. (2014) highlighted that the influence of the gov-
ernment and international consumers increases the level of CSR
disclosure.
First, the analysis of the literature, summarized in Table 1, under-
lines a limited attention to the determinants of IR quality; second, this
analysis highlights the absence of studies on the role played by stake-
holders' pressure in the context of IR. This study aims to fill these gaps
by investigating the relationship between stakeholders' pressure and
IR quality.
3 | THEORETICAL BACKGROUND
In line with other contributions on the relationship between stake-
holder's pressure and nonfinancial disclosure (Fernandez‐Feijoo et al.,
2014; Huang & Kung, 2010; Liu & Anbumozhi, 2009; Prado‐Lorenzo
et al., 2009), this study's theoretical framework is based on the stake-
holder theory. The general idea behind the stakeholder theory is that
organizations, within their own business activities, must take into
account the interests of stakeholder groups and not just the share-
holders (Freeman, 1984). In fact, according to this theory, over time,
the survival of companies is connected with their ability to manage
stakeholder relationships. Donaldson and Preston (1995) described
stakeholder theory according to three different perspectives—descrip-
tive, normative, and instrumental. The descriptive perspective examines
how companies consider the needs of their stakeholders, in reality
(Brenner & Cochran, 1991). This perspective is unsuitable for explaining
the relationship between stakeholders' pressure and the quality of dis-
closure (Dong et al., 2014) as it is not interpretative of the phenomenon.
The normative perspective expresses the ethical principles underly-
ing the stakeholder theory, suggests how companies should manage
their stakeholder relationships, and highlights the ethical–moral respon-
sibilities of organizations towards stakeholders (Deegan, 2002). How-
ever, even this perspective is not adequate to explain the relationship
between stakeholders' pressure and the quality of disclosure (Dong
et al., 2014); this is because stakeholder engagement is connected with
corporate values and culture and is independent of instrumental rea-
sons for adapting to the context.
The instrumental perspective specifies the way in which an organi-
zation interacts with its stakeholders on the basis of their salience (Dong
et al., 2014) in order to obtain the legitimacy to operate (Deegan, 2006).
Therefore, this perspective requires that companies consider the risks
1594 VITOLLA ET AL.

TABLE 1 Literature review summary

Determinants of integrated reporting

Author/s (year) Journal or conference Dependent variable Tested hypotheses Main findings

Frías‐Aceituno et al. Business Strategy and IR adoption Firm size (+) Firm size (+)
(2014) the Environment Firm profitability (+) Firm profitability (+)
Business sector (+) Industry concentration (−)
Industry concentration (−)
Growth opportunities (+)
Lai et al. (2016) Business Strategy and IR adoption ESG disclosure rating (+) ESG disclosure rating (+)
the Environment Firm size (+)
Financial leverage (+)
Firm profitability (+)
Environmentally sensitive industry (+)
Sierra‐García et al. Corporate Social IR adoption CSR report assurance (+) CSR report assurance (+)
(2015) Responsibility and
Environmental
Management
Bavagnoli et al. (2018) EURAM, European IR quality Environmentally sensitive industry (+) European firms (+)
Academy of Assurance (+)
Location (±)
Management,
Financial leverage (+)
Reykjavik, 2018
Firm profitability (+)
IR Assurance (+)
Frías‐Aceituno, Corporate Social IR adoption Board size (+) Board size (+)
Rodriguez‐Ariza, and Responsibility and Board independence (+) Board gender diversity (+)
Garcia‐Sanchez Environmental Board activity (+)
(2013) Management Board national diversity (+)
Board gender diversity (+)
Alfiero et al. (2017) Corporate Ownership IR adoption Board size (+) Board size (+)
and Control Board gender diversity (+) Board gender diversity (+)
Board average age (+)
Gerwanski et al. (2019) Business Strategy and Materiality disclosure Learning effects (+) Learning effects (+)
the Environment quality in IR Gender diversity (+)
Readability (+) Assurance (+)
Gender diversity (+)
Assurance (+)
DJSI listing (+)
Earnings management (−)
Velte (2018) Problems and IR readability Audit committees' financial expertise (+) Audit committees' financial
Perspectives in expertise (+)
Management Audit committees' sustainability Audit committees' sustainability
expertise (+) expertise (+)
Audit committees' combined financial Audit committees' combined
and sustainability expertise (+) financial and sustainability
expertise (+)
Ahmed Haji and Managerial Auditing IR practice (extent and Audit committees' effectiveness (±) Audit committees'
Anifowose (2016) Journal compliance with IIRC effectiveness (+)
principles) Audit committees' size (±) Audit committees' meetings (+)
Audit committees' independence (±) Audit committees' authority (+)
Audit committees'
meetings (±)
Audit committees' financial expertise (±)
Audit committees'
authority (±)
Frías‐Aceituno, Journal of Cleaner IR adoption Civil law countries (+) Civil law countries (+)
Rodríguez‐Ariza, and Production Strictly enforced regulations (+) Strictly enforced regulations (+)
García‐Sánchez (2013)
(Continues)
VITOLLA ET AL. 1595

TABLE 1 (Continued)

Determinants of integrated reporting

Author/s (year) Journal or conference Dependent variable Tested hypotheses Main findings
García‐Sánchez et al. International Business IR adoption Power distance (‐) Individualism vs. collectivism (−)
(2013) Review Individualism vs. collectivism (−) Masculinity vs. femininity (−)
Masculinity vs. femininity (−)
Uncertainty avoidance (+)
Long‐term vs. short‐term orientation (+)
Vitolla et al. (n.d.) Business Strategy and IR quality Power distance (−) Power distance (−)
the Environment Individualism vs. collectivism (−) Individualism vs. collectivism (−)
Masculinity vs. femininity (−) Masculinity vs. femininity (−)
Uncertainty avoidance (+) Uncertainty avoidance (+)
Long‐term vs. short‐term orientation (+) Indulgence vs. restraint (−)
Indulgence vs. restraint (−)
Raimo et al. (2019) 9th International IR quality Performance orientation (−) Performance orientation (−)
Symposium on Assertiveness (−) Assertiveness (+)
Natural Resources Institutional collectivism (+) Institutional collectivism (+)
Management, Zaječar, Uncertainty avoidance (+) Uncertainty avoidance (+)
2019 Future orientation (−) Future orientation (−)
Humane orientation (+) Humane orientation (+)

Stakeholders' pressure and nonfinancial disclosure

Liu and Anbumozhi Journal of Cleaner Environmental Governments' pressure (+) Governments' pressure (+)
(2009) Production disclosure level Shareholders' pressure (+)
Creditors' pressure (+)
Huang and Kung Journal of Business Environmental Governments' pressure (+) Governments' pressure (+)
(2010) Ethics disclosure level Debtors' pressure (+) Debtors' pressure (+)
Consumers' pressure (+)
Suppliers' pressure (+)
Competitors' pressure (+)
Shareholders' pressure (+) Consumers' pressure (+)
Employees' pressure (+) Competitors' pressure (+)
Environmental protection Shareholders' pressure (+)
organizations' pressure (+) Employees' pressure (+)

Accounting firms' pressure (+) Environmental protection

organizations' pressure (+)
Accounting firms' pressure (+)
Liesen et al. (2015) Accounting, Auditing 1) GHG emissions' 1) Stakeholder exposure (+) 1) Stakeholder exposure (+)
& Accountability disclosure adoption
Journal 2) Completeness of 2) Stakeholder exposure* 2) Stakeholder exposure*
GHG emissions'
disclosure
Fernandez‐Feijoo Journal of Business Transparency in CSR Environmental pressure (+) Environmental pressure (+)
et al. (2014) Ethics reporting Consumers' pressure (+) Consumers' pressure (+)
Investors' pressure (+) Investors' pressure (+)
Employees' pressure (+) Employees' pressure (+)
Dong et al. (2014) Journal of Cleaner CSR disclosure level International consumers' International consumers'
Production pressure (+) pressure (+)
Mining industry
associations' pressure (+)
Local communities' pressure (+)

Note. Plus sign (+) indicates positive association; minus sign (−) indicates negative association; asterisk (*) indicates no association.
Abbreviations: CSR, corporate social responsibility; GHG, greenhouse gas; IR, integrated reporting.

and opportunities presented by the main stakeholders for seizing the for financial balance in the medium and long terms, and the ability to
strategic opportunities. These opportunities can be connected to spe- create shared value (Freeman, 1984). From an instrumental perspective,
cific or general aspects, such as the survival of the company, the search companies identify stakeholders on the basis of their relevance
1596
(Mitchell, Agle, & Wood, 1997) and salience (Dong et al., 2014) and
develop best practices for managing relationships with these stake-
holders (Bendheim, Waddock, & Graves, 1998). Therefore, the strategic
management of relationships with stakeholders is connected with the
ability of the company to balance the interests and needs of different
stakeholders, and it is aimed at obtaining legitimacy in the context in
which the company operates (Ogden & Watson, 1999). According to
this perspective, it is essential to obtain the approval and consent from
the stakeholders, given that these stakeholders bring the resources and
contributions necessary for conducting business activities.
This perspective adequately explains the relationship between the
stakeholders' pressure and the quality of disclosure and therefore rep-
resents the theoretical basis of this study.
Disclosure represents a way to respond to the information needs of
stakeholders and demonstrate alignment with their expectations
(Azizul Islam & Deegan, 2008; Deegan & Blomquist, 2006; Elijido‐
Ten, Kloot, & Clarkson, 2010; Van der Laan, Van Ees, & Van
Witteloostuijn, 2008). Particularly, disclosure serves to improve trans-
parency in relationships and gain the credibility and trust of stake-
holders. Firms are called to respond to the needs of relevant or
salient stakeholders, represented by those who can influence corpo-
rate performance (Gray, Owen, & Adams, 1996). Therefore, from an
instrumental perspective, disclosure is driven by the pressures emerg-
ing from stakeholders' demand for information (Deegan & Blomquist,
2006; Guthrie, Petty, Yongvanich, & Ricceri, 2004; Yongvanich &
Guthrie, 2005).
Therefore, stakeholders' pressure determines the level of expecta-
tions and information needs that can vary between different stake-
holder groups and to which companies are called to respond in order
to obtain legitimacy in the context of reference.
4 | H Y P O T HE S E S D E V EL O P M E NT
In line with the instrumental perspective of stakeholder theory, stake-
holders' pressure represents a key determinant of IR quality. The dis-
semination of high‐quality information within the integrated reports
represents a response by firms to stakeholders' needs and a means to
gain their trust and credibility (Azizul Islam & Deegan, 2008; Deegan &
Blomquist, 2006; Elijido‐Ten et al., 2010; Van der Laan et al., 2008).
Although all stakeholders are interested in the general content of inte-
grated reports, some specific information is particularly interesting for
certain stakeholder groups.
In the following section, hypotheses are developed in relation to
the pressures of specific stakeholder groups to obtain financial and
nonfinancial information in an integrated manner.
Customers seek financial information in the integrated report such
as those related to product prices and production costs. However,
according to Huang and Kung (2010), customers also emphasize nonfi-
nancial information in IR. In this perspective, customers seek informa-
tion on the environmental impact of production, customer health and
safety, marketing and labelling, and customer privacy. In this regard,
Park (1999) found that companies with better customer relationships
VITOLLA ET AL.
provide higher quality environmental information. This shows how
nonfinancial performance particularly interests customers (Roberts,
1992). Furthermore, customers may also be interested in aspects such
as relationships with associations that protect consumers' rights, pri-
vacy, and safety. In light of this, an improvement in the quality of the
information in the integrated reports would be representative of the
response of companies to the pressures connected with the informa-
tion needs of customers. In this perspective, the quality of disclosure
would determine an increase in the corporate image and reputation
that represent key factors influencing consumers' purchase decisions.
Therefore, in light of this, we propose the following hypothesis:
H1. IR quality is positively affected by customers'
pressure.
The growing attention to environmental issues has led to the for-
mation of several organizations voluntarily undertaking the task of
implementing environmental protection and supporting the govern-
ment in monitoring the sources of pollution. These organizations
exert pressure on companies that have negative environmental
behaviours to implement production processes that are less harmful
to the environment. Furthermore, these organizations pressurize
companies to disclose more information about the effects of their
processes and products on the environment. Deegan and Gordon
(1996) found that the extent of corporate environmental disclosure
is positively associated with the environmental lobby groups' pres-
sure regarding the information on environmental performance of
firms. Gamerschlag, Möller, and Verbeeten (2011) obtained similar
results, finding that companies under the pressure of environmental
groups disclose more environmental information. Therefore, compa-
nies operating in environmentally sensitive industries are generally
subject to more in‐depth monitoring by environmental protection
organizations and are thus more encouraged to disclose high quality
information (Cho & Patten, 2007; Cowen, Ferreri, & Parker, 1987;
Patten, 1991). Likewise, environmental protection organizations
may also be interested in financial profiles related to the negative
and positive externalities of a business activity in order to fully
assess their effects. Therefore, in light of this, we propose the fol-
lowing hypothesis:
H2. IR quality is positively affected by environmental
protection organizations' pressure.
In general, because employees' rights and interests are closely linked
to the performance of companies, they are particularly interested in
receiving information about the company's strategies and financial
results. Following the growing importance of social and environmental
issues, employees have started emphasizing the nonfinancial perfor-
mance of a company. Employees have realized that negative social
and environmental performance can lead to penalties and a loss of cor-
porate reputation that could undermine their rights and interests
(Huang & Kung, 2010). Particularly, employees are interested in infor-
mation related to workplace health, training and education, diversity,
equal opportunity, and ethics. Moreover, according to Huang and Kung
(2010), employees are usually more organized and can resort to trade
VITOLLA ET AL.
unions or some special corporate agency to assert their rights and inter-
ests. This means that the higher the number of employees, the greater is
their influence on the company. This can increase the pressure on com-
panies to produce high‐quality integrated reports.
Therefore, in light of this, we propose the following hypothesis:
H3. IR quality is positively affected by employees'
pressure.
Shareholders are primarily interested in financial performance; how-
ever, for a full evaluation of the effects of strategies in the medium and
long terms, it is necessary to evaluate the social and environmental
aspects of a business activity. Therefore, shareholders also exert pres-
sure in order to obtain integrated information that does not solely com-
prise financial aspects. In fact, they are also interested in aspects related
to compliance with environmental and social standards and costs and
monetary benefits of environmental and social initiatives. Naturally,
the information needs increase in the presence of information asymme-
try between ownership and management (Jensen & Meckling, 1976).
Hill and Jones (1992) underlined how companies tend to provide more
information to reduce information imbalance. In this perspective, the
request for transparency and information from shareholders is influ-
enced by the ownership structure. Keim (1978) has pointed out that a
more dispersed ownership structure leads to greater shareholder need
for information, particularly nonfinancial information, which appear to
receive more attention from shareholders (Huang & Kung, 2010). A
more dispersed ownership structure leads to greater monitoring and
therefore obliges companies to disclose more both financial and nonfi-
nancial information (Eng & Mak, 2003). Furthermore, in companies with
a dispersed ownership structure, disclosing more information can be a
way of responding to the pressure of the financial market and attracting
and maintaining investors (Liu & Anbumozhi, 2009). Therefore, in light
of this, we propose the following hypothesis:
H4. IR quality is positively affected by shareholders'
pressure.
Among the different categories of stakeholders, the government
plays a central role due to its power over companies. Governments
can interfere in business activities by fining companies that violate
laws and regulations or, alternatively, by ordering activities to be
closed (Huang & Kung, 2010). Companies can choose to implement
FIGURE 1 Analytical model and
determinants of integrated reporting quality
1597
responsible and sustainable activities to mitigate the risk of govern-
ment intrusion into their businesses (Liu & Anbumozhi, 2009). Govern-
ments are interested in financial information both for taxation
purposes and for issues related to economic development. Further-
more, they seek nonfinancial information such as environmental and
social information that could impact on the well‐being of the commu-
nity. Darrell and Schwartz (1997) found that, after the 1989 oil tanker
leak in Alaska, there has been a considerable increase in the level of
environmental disclosure by companies due to pressures arising from
public policies. Furthermore, Deegan and Rankin (1996) highlighted
how companies, in the absence of disclosure regulations concerning
environmental issues, provided only environmental information
favourable to their corporate image. Even the companies prosecuted
for violating environmental rules tended to provide more environmen-
tal information in their annual reports. These evidences show that the
government is a powerful stakeholder and how its pressure affects the
quality of the disclosure. Therefore, in light of this, we propose the fol-
lowing hypothesis:
H5. IR quality is positively affected by governments'
pressure.
In line with the above hypotheses, the analytical framework for
this study is indicated in Figure 1.
5 | RESEARCH METHODOLOGY
5.1 | Sample
As our study's population, we selected 145 international companies
that have adopted IR. The reports have been sourced from the IIRC
website. The IIRC website was chosen to ensure that reports were
compliant with the IIRC framework. The reports were selected ran-
domly. The sample is heterogeneous by firm size (small, medium, and
large), year (2011–2018), and region (Europe, Asia, America, Africa,
and Oceania). We conducted tests for normality. The statistical analy-
ses (Kolmogorov–Smirnov tests, skewness, and kurtosis values) were
used. The results show that our data are normally distributed.
Table 2 shows the division of the sample by industry.
1598 VITOLLA ET AL.

TABLE 2 Sample distribution by industry represents an error as the inclusion of diverse information in the reports
does not guarantee a high disclosure quality. Therefore, a careful evalu-
Frequencies
ation of the quality of disclosure must include, first, the content
Relative
(Unerman, 2000) but must not be limited to it. In fact, quality assess-
Industry Absolute (%)
ment must also take into account the themes, form, style, and range of
Agriculture, forestry, and fishing 8 5.517
issues (Garegnani, Merlotti, & Russo, 2015; Hackston & Milne, 1996;
Chemicals, rubber, plastics, and nonmetallic 16 11.034 Hammond & Miles, 2004).
products
We measured the IR quality (IRQUALITY) using the scoreboard
Finance, insurance, and real estate 30 20.690
developed by Pistoni, Songini, and Bavagnoli (2018). We chose this
Food, beverages, and tobacco 10 6.897 scoreboard over others that are not strictly related to IR (Dong et al.,
Gas, water, and electricity 9 6.207 2014; Liesen et al., 2015). Furthermore, compared with those focused
Machinery, equipment, furniture, and recycling 16 11.034 on IR (Bavagnoli et al., 2018; Pavlopoulos et al., 2019), the adopted
Metals and metal products 17 11.724 scoreboard is not limited to measuring quality only in terms of content.

Postal and telecommunications 6 4.138 In fact, in order to measure the IR quality, this scoreboard considers the
following four areas: background, content, form, and assurance and reli-
Services 13 8.966
ability. These four areas are derived from the quality attributes defined
Transport 6 4.138
by Hammond and Miles (2004), using semistructured questionnaires.
Wholesale and retail trade 9 6.207
Later, Pistoni et al. (2018) adapted and classified these attributes on
Wood, cork, and paper 5 3.448 the basis of their relevance. This led to the identification of the four
aforementioned areas in relation to IR.
The background was evaluated by considering if the reports pres-
ent an introduction that explains the following elements: aims pursued
5.2 | Model specification
by IR, motivations connected to IR adoption, the role of a manager in

In order to verify the research hypotheses, we used a pooled ordinary the IR process, recipients of the report, the title, compliance of IR with

least squares (OLS) estimation model; despite having an underlying international reporting standards, and the commitment of the chief

panel structure, this model exploits the OLS estimator. We adopted executive officer. The adopted scoreboard assesses the presence or

this model as we found an almost homogeneous situation among the absence of each of these seven elements and assigns a score of 1 in

observations of the sample, and no individual effects exist. Moreover, the case of presence and a score of 0 in the case of absence. There-

the results for the Breusch–Pagan test suggest that the fixed effects fore, the maximum score for this area is 7.

model and the random effects model do not perform better than the The content was evaluated considering the compliance of the inte-

pooled OLS model. Additionally, it should be noted that, we have pos- grated reports with the requirements of the IIRC framework, which

itively evaluated the joint occurrence of assumptions related to focuses on eight basic elements and two fundamental concepts. The

exogeneity, homoscedasticity, absence of multicollinearity, and the eight basic elements are strategy and resource allocation, governance,

presence of deterministic variables, which confirm that the pooled organizational overview and external environment, risks and opportuni-

OLS should be the preferred model. Furthermore, this model is also ties, performance, outlook, basis of presentation, and business model.

suitable due to the presence of a shock represented by the introduc- The two fundamental concepts consider the value creation process

tion of the “International <IR> framework” in 2013; it could affect and capitals. The adopted scoreboard assigns a score between 0

the quality of the integrated reports (Bavagnoli et al., 2018). The (absence) and 5 (very high quality) to each of these 10 elements. There-

regression function used is the following:
IRQUALITYi; t ¼ β0 þ β1 CUSPREi; t þ β2 ENVPREi t þ β3 EMPREi t
þ β4 SHAPREi; t þ β5 GOVPREi; t þ β6 AGEi; t
þ β7 YEARi; t þ β8 EUi; t þ β9 ROEi t þ εi; t :
5.3 | Dependent variable
Corporate disclosure quality is a difficult notion to define (Vitolla
et al.,n.d.). Imhoff (1992) considers the disclosure quality as a subjective
assessment on the basis of the reliability, relevance, and comparability
of the information disseminated. Sometimes the concept of disclosure
quality is associated with the amount of information disclosed (Deegan
& Gordon, 1996; Gray & Vint, 1995; Unerman, 2000). However, this
fore, the maximum score for this area is 50.
The form was evaluated by examining the summary of the report on
the basis of the number of pages, accessibility, and readability and clar-
ity of the report. The adopted scoreboard assigns a score between 0 and
5 to each of these three elements. Therefore, the maximum score for
this area is 15.
The element of assurance and reliability is evaluated on the basis of
whether an internal audit and/or a third‐party verification has been
carried out and whether the organization has received awards and
acknowledgments for its own report. The adopted scoreboard assesses
the presence or absence of each of these three elements and assigns a
score of 1 in the case of presence and a score of 0 in the case of
absence. Therefore, the maximum score for this area is 3.1
1
The coding criteria used are those identified by Pistoni et al. (2018, pp. 494–496).
VITOLLA ET AL.
The quality score of the report is denoted by the sum of the
unweighted scores of the four aforementioned areas. Therefore, the
maximum quality score of a report is 75. This implies that the score
is assigned through a visual content analysis.
The reliability of this scoreboard was tested through Cronbach's
alpha (Pistoni et al., 2018). To improve the reliability of the data
and solve the problems related to the subjectivity of the content
analysis techniques, three researchers defined and followed a
specific detection procedure (Krippendorff, 1980). In a first phase,
they carried out a joint pilot test on five integrated reports. Subse-
quently, the three researchers independently analysed 10 additional
reports. The comparison of the results showed good data reliability.
The Krippendorff's alpha had a value of.88, showing an adequate
level of agreement between the three researchers (Hayes &
Krippendorff, 2007).
5.4 | Independent variables
For the operationalization of the variables, in relation to the impact of
pressure on other types of disclosure, we followed the approach of Liu
and Anbumozhi (2009) and Fernandez‐Feijoo et al. (2014). Following
this approach, for the measurement of pressure, we decided not to
proceed with the questionnaires due to constraints associated with
the availability of data and concerns regarding the influence of inter-
viewees' perception on the measures.
With reference to customer and environmental pressure,
operationalization is derived from a focus on the relationship between
stakeholders and the industry (Fernandez‐Feijoo et al., 2014).
Concerning employees' pressure, the operationalization is closely
linked to the size of the company (Fernandez‐Feijoo et al., 2014). Fur-
thermore, with reference to shareholder pressure, the
operationalization reflects the degree of ownership dispersion (Liu &
Anbumozhi, 2009). Finally, concerning governmental pressure,
operationalization reflects the mandatory nature of IR (Bavagnoli
et al., 2018). Below, we elaborate on different operationalizations.
Customers' pressure (CUSPRE) was defined as a dummy variable.
Complying with Fernandez‐Feijoo et al. (2014), this variable adopted
a value of 1 if the company belonged to a consumer goods industry.
Following Sweeney and Coughlan (2008) and Branco and Rodrigues
(2008), the following sectors were considered as consumer‐based
industries: energy utilities, financial services, healthcare, household
and personal products, waste management, retailers, telecommunica-
tions, textiles and apparel, food and beverage products, and water util-
ities. For companies operating in other industries, the variable adopted
a value of 0.
Environmental pressure (ENVPRE) was defined as a dummy vari-
able representing the environmental sensitivity of the industry in
which the firm operates. Complying with Fernandez‐Feijoo et al.
(2014) and Liu and Anbumozhi (2009), this variable adopted a value
of 1 if the activities of the company significantly impacted the envi-
ronment. Following Tagesson, Blank, Broberg, and Collin (2009),
Gamerschlag et al. (2011), and Branco and Rodrigues (2008), the
1599
following sectors were considered environmentally sensitive indus-
tries: agriculture, automotive, aviation, chemical, construction, con-
struction materials, energy, energy utilities, forest and paper
products, logistics, metal products, mining, transport, waste manage-
ment, and water utilities. For the companies operating in other indus-
tries, the variable adopted a value of 0.
Following Huang and Kung (2010), to measure employees' pres-
sure (EMPPRE), the natural logarithm of the total employees was
used as a proxy. Huang and Kung (2010) assessed that, in reference
to environmental disclosure, employees in large companies are gener-
ally more organized and their opinions are more likely to be consid-
ered by the top management. To support this assessment,
Fernandez‐Feijoo et al. (2014) used company size as a proxy for
employees' pressure.
To measure shareholders' pressure (SHAPRE), following Liu and
Anbumozhi (2009), the difference between the company's total shares
and the percentage of floating stock possessed by the top 10 share-
holders was calculated. It is expected that the higher the ratio of floating
shares held by a smaller group of owners, the lower is the pressure that
might be felt by the firm from the shareholders (Liu & Anbumozhi,
2009). However, for companies with a more concentrated ownership
structure, the disclosure of less information implies cost savings (Huang
& Kung, 2010).
To measure governments' pressure (GOVPRE), the mandatory
nature of IR was used as a proxy. In fact, the pressure that companies
receive from governments is less strong when disclosure is voluntary,
and it is more intense when disclosure is mandatory. Following
Bavagnoli et al. (2018), this variable adopted a value of 1 if the com-
pany was located in a country in which IR is mandatory and 0
otherwise.
5.5 | Control variables
First, we controlled for the age (AGE) of the company. This variable,
defined as the number of years from the establishment of the com-
pany until the end of 2018, represents a proxy for the perceived sta-
bility of the firm. Following Liu and Anbumozhi (2009), it is expected
that older companies are more likely to produce better‐quality inte-
grated reports than those of younger companies.
The variable year (YEAR), a dummy variable, adopted a value of 1 for
the reports published after 2013 and 0 for the reports published before
2013. In 2013, the “Consultation draft on the International <IR> frame-
work” was first issued, followed by the “International <IR> framework.”
Thus, following Bavagnoli et al. (2018), the reports published since 2013
are assumed to be more consistent with the IR framework than those
published in the past.
The firm's location, a dummy variable expressed as EU, adopted a
value of 1 if the company is located in Europe and 0 if otherwise.
Bavagnoli et al. (2018) highlighted how the reports of European com-
panies have a higher quality when compared with those of non‐
European companies.
1600 VITOLLA ET AL.

Following Liu and Anbumozhi (2009), this study controlled the for
return on equity (ROE) because the financial performance of a com-
pany influences the quality of its reports, given that high costs are
associated with the preparation of an integrated report.
Table 3 summarizes all the variables used in this study.
6 | RESULTS
a mean value of 57.33; it indicates, on an average, the high quality of
the analysed reports. CUSPRE and ENVPRE show an average value
close to 50%, depicting a high balance of the selected sample. SHAPRE
and GOVPRE present mean values of 0.36 and 0.31, respectively. The
Pearson rank correlation was used to explore the relationship between
stakeholders' pressure and IR quality. The results of Pearson rank corre-
lation are shown in the second part of Table 4. There is no indication
that an unacceptable level of multicollinearity is present, as the highest

6.1 | Descriptive analysis of the variables and correlation coefficient is −.666 for ENVPRE and CUSPRE. Harmful

correlation analysis levels of multicollinearity were not expected to occur until the correla-
tion coefficient reached ±.8 or ±.9 (Farrar & Glauber, 1967). We also
The descriptive analysis of the variables is shown in the first part of evaluated the potential multicollinearity between the explanatory vari-
Table 4. The dependent variable represented by IRQUALITY presents ables using the means of the variance inflator factor (VIF) analysis. Our

TABLE 3 Variables description

Variable Symbol Description

Dependent variable
Integrated reporting quality IRQUALITY Integrated reporting quality assessment including four main elements: background, content,
form, and assurance and reliability
Independent variable
Customers' pressure CUSPRE Dummy variable equal to 1 if the company belongs to consumer products and services
industry and 0 if otherwise
Environmental organizations' pressure ENVPRE Dummy variable equal to 1 if the activities of the company have an important impact on
the environment and 0 if otherwise
Employees' pressure EMPPRE Natural logarithm of the total employees
Shareholders' pressure SHAPRE Difference between the company's total shares and the percentage of floating stock
possessed by the top 10 shareholders
Governments' pressure GOVPRE Dummy variable equal to 1 if the company is located in a country in which integrated
reporting is mandatory and 0 if otherwise
Control variables
Age AGE Number of years from the establishment of the company until the end of 2018
Year of report publication YEAR Dummy variable equal to 1 if the report was published after 2013 and 0 if otherwise
Firm's location EU Dummy variable equal to 1 if the company is located in Europe and 0 if otherwise
Profitability ROE Net income divided by common equity

Abbreviation: ROE, return on equity.

TABLE 4 Means, standard deviations, VIFs, and correlations

Variables Mean S.D. VIF IRQUALITY CUSPRE ENVPRE EMPPRE SHAPRE GOVPRE AGE YEAR EU ROE

IRQUALITY 57.33 7.71 1

CUSPRE 0.45 0.50 1.94 0.128 1
ENVPRE 0.53 0.50 1.94 0.085 −0.666*** 1
EMPPRE 9.63 1.69 1.10 0.229*** 0.078 0.034 1
SHAPRE 0.36 0.21 1.20 0.123 0.119 −0.081 0.203** 1
GOVPRE 0.31 0.46 1.91 0.265*** 0.028 −0.004 −0.105 −0.268*** 1
AGE 59.18 38.29 1.11 0.129 −0.121 0.182** 0.139* −0.009 0.003 1
YEAR 0.93 0.25 1.03 0.063 0.030 −0.050 −0.063 0.037 −0.108 0.054 1
EU 0.44 0.49 1.80 −0.247*** −0.056 0.020 0.081 −0.016 −0.594*** −0.138* 0.022 1
ROE 18.40 20.34 1.06 −0.077 0.032 −0.082 0.027 −0.010 0.102 0.016 −0.083 0.064 1

Note. n = 145. Abbreviations: ROE, return on equity; SD, standard deviation; VIF, variance inflator factor. ***Significant at the 1% level;
**Significant at the 5% level; *Significant at the 10% level.
VITOLLA ET AL. 1601

VIFs, as shown inTable 4, ranged from a low value of 1.03 to a high value

0.006***

0.002***

0.000***
0.078*
0.023**

0.031**
p value

0.129
0.081*
of 1.94. According to Myers (1990), if any VIF falls below 10, then the

0.784
0.203
effect of multicollinearity will become insignificant in a regression

0.208
145
model. Therefore, the multicollinearity does not pose a problem in the

−0.422 (1.538)
−0.036 (0.028)
36.803 (4.506)
3.685 (1.597)
2.795 (1.590)
0.979 (0.354)
6.276 (2.878)
5.325 (1.701)
0.027 (0.015)
3.498 (2.288)
interpretation of findings. Additionally, we conduct the normality tests;

Model VI
the results of these tests indicate that the normality assumptions are not

β (SE)
violated in the regression models. Therefore, the results of the regres-
sion are analysed believing that the above assumptions of the regres-

0.000***
0.036**
0.049**
p value
sion hold.

0.222
0.357
0.282

0.092
145
3.597 (1.701)
0.032 (0.016)
2.988 (2.437)
−1.467 (1.588)
−0.033 (0.030)
52.794 (2.883)
6.2 | Multivariate analysis

Model V
To test our hypotheses, we used a pooled OLS regression with robust

β (SE)
standard errors. We regress IRQUALITY on the different types of
stakeholders' pressure in Model VI to test for the impact of all the

0.007***

0.000***
0.068*
p value

0.060*

0.350

0.476
hypothesized variables in one model. The results, with reference to
the coefficients of hypothesized variables, are consistent with the

0.087
145
−3.450 (1.249)
−0.021 (0.030)
53.449 (2.811)
findings reported in Models I–V, as shown in the Table 5.

0.029 (0.162)
2.281 (2.434)
5.361 (2.826)
H1 is supported in the multivariate results, with CUSPRE showing

Model IV
a significantly positive association with the IRQUALITY. Additionally,

β (SE)
H2 is supported. The results show a significant and positive associa-

Abbreviation: ROE, return on equity. ***Significant at the 1% level; **Significant at the 5% level; *Significant at the 10% level.
tion between ENVPRE and IRQUALITY.

0.002***

0.002***

0.000***
p value

0.196
0.208

0.434
Additionally, EMPPRE and GOVPRE have a positive impact on
IRQUALITY. These results support H3 and H4.

0.128
145
−3.844 (1.223)
−0.023 (0.029)
44.258 (4.282)
Finally, H5 is also supported in the multivariate results, with

0.020 (0.160)
3.015 (2.382)
1.161 (0.359)
SHAPRE showing a significantly positive association with IRQUALITY.
Model III

Therefore, the results obtained demonstrate how a high amount of

β (SE)

pressure from all stakeholder groups leads to higher quality integrated

reports.

0.006***

0.000***
p value

0.090*

0.091*
0.315

0.485
7 | DISCUSSION

0.063
145
−3.559 (1.266)
−0.021 (0.030)
55.248 (2.745)
0.028 (0.016)
2.489 (2.468)
1.561 (1.165)
Model II

The results show that stakeholders' pressure positively affects the IR

β (SE)

quality and therefore represents a key determinant. This means that

the quality of IR is not only influenced by the internal characteristics,
0.008***

0.000***
0.044**
0.042**

location of the company, and soft variables, such as entrepreneurial

p value

0.352

0.417

values and managerial culture (Bavagnoli et al., 2018, Vitolla et al., n.

d.; Raimo et al., 2019) but also by external pressures on the company.
0.091
145
0.033 (0.016)
2.266 (2.429)
−3.340 (1.250)
−0.024 (0.030)
54.062 (2.696)
2.556 (1.242)

A key to understanding these results is related to the instrumental

perspective of the stakeholder theory. In this perspective, IR quality
Model I

β (SE)

seems to be an adaptive response of companies to the pressures

emerging from the information demands of stakeholders. Companies
0.006***

0.000***
Linear regression results

make choices and implement actions aimed at filling the legitimacy

p value

0.081*
0.316

0.475

gap until the desired level is reached. Therefore, a company's efforts

in this direction aim at increasing, maintaining, and restoring company
0.070
Baseline model

145
0.028 (0.016)
2.472 (2.454)
−3.552 (1.260)
−0.021 (0.030)
55.321 (2.656)

legitimacy, which is a necessary condition for operating effectively in a

socio‐economic context. In the light of this, IR quality is instrumental
β (SE)

to achieving the legitimacy objectives. The instrumental approach to

stakeholder theory considers the different influences of various stake-
Variables

GOVPRE
EMPPRE
ENVPRE

holder groups and not only shareholders. From this perspective, IR

SHAPRE
CUSPRE
TABLE 5

YEAR

Cons

quality serves to improve a company's relationship with stakeholders

ROE
AGE

2
Adj
EU

and obtain social consensus.

1602
The particularity of the IR is connected to the multidimensionality
and connectivity character of the disclosed information. Stakeholders
intending to obtain information related to a particular dimension
instead exert pressure on the company to get integrated information
related to several aspects of business management.
By conducting an in‐depth analysis of results, we observe that cus-
tomers exert pressure to obtain both financial information (related to
product and production costs) and nonfinancial information (environ-
mental impact of production, customer health and safety, marketing
and labelling, and customer privacy). In this perspective, a high‐quality
integrated report represents a response of companies to these pres-
sures; through this response, companies aim to create a favourable
commercial environment by improvement relationships within the
community of which the customer is a member. This result is consis-
tent with those found by Huang and Kung (2010) in relation to the
environmental disclosure level, Fernandez‐Feijoo et al. (2014) in rela-
tion to transparency in CSR reporting, and Dong et al. (2014) in rela-
tion to the CSR disclosure level.
Even environmental protection organizations are interested in the
interconnections between environmental and financial information
(financial profile related to the negative and positive externalities of
business activities). Therefore, even in this case, the IR quality appears
to be an outcome of the pressures exerted on a company. In this per-
spective, IR represents a tool that can be employed to inform the envi-
ronmental protection organizations about the environmental and
financial impacts of business activities and thereby increase the legit-
imacy of the company in the context of reference. This result is consis-
tent with those found by Huang and Kung (2010) in relation to the
environmental disclosure level and Fernandez‐Feijoo et al. (2014) in
relation to transparency in CSR reporting.
Employees are interested in financial (added value and growth pros-
pects), social (diversity, equal opportunity, and human rights) and envi-
ronmental performance (healthiness of the workplace). In this
perspective, the companies receive a high amount of pressure from
employees to produce high‐quality integrated reports. From an instru-
mental perspective, IR serves to obtain consensus from employees
and to create a good working environment within the company, which
in turn can improve worker productivity. This result is consistent with
those found by Huang and Kung (2010) in relation to the environmental
disclosure level and Fernandez‐Feijoo et al. (2014) in relation to trans-
parency in CSR reporting.
Shareholders also have interests that go beyond financial perfor-
mance. They are also interested in aspects such as compliance with
environmental and social standards, compliance costs, and monetary
benefits of environmental and social initiatives. In this view, obtaining
synergies between financial, social, and environmental dimensions
could be the key to the success of companies in the medium and long
terms. In this perspective, the quality of IR represents a response to
the greater information needs of the shareholders increasingly inter-
ested in receiving integrated information, which is presented articu-
lately, on complex business dynamics. This result is consistent with
those found by Huang and Kung (2010) in relation to the environmen-
tal disclosure level.
VITOLLA ET AL.
Finally, governments are interested both in financial information
for taxation purposes and for issues related to economic development;
they also seek nonfinancial information, such as environmental and
social information, which could impact the well‐being of the commu-
nity. In this perspective, IR quality is a direct consequence of the high
amount of pressures exerted on a company from its own government.
Furthermore, according to the instrumental approach, the dissemina-
tion of high‐quality integrated information could be a way to avoid
excessive regulation by governments. This result is consistent with
those found by Liu and Anbumozhi (2009) and Huang and Kung
(2010) in relation to the environmental disclosure level.
The results obtained are in line with those related to other types
of voluntary disclosure. The interesting aspect of this study is linked
to the fact that the stakeholder groups require integrated informa-
tion, which is not limited to specific dimensions of company man-
agement, based on the awareness that interconnected information
contributes towards a better understanding of the business
dynamics.
8 | CO NC LUSIO NS
This study analysed the impact of the pressure of different stake-
holder groups (customers, environmental protection organizations,
employees, shareholders, and governments) on the IR quality. The
results show that stakeholders' pressure is a key determinant of
the quality of integrated reports. Specifically, the results show how
the pressure from customers, environmental protection organiza-
tions, employees, shareholders, and governments favours the publi-
cation of higher quality integrated reports. This study contributes
to relevant literature on the factors that influence the quality of
IR. The results of this study show that, in addition to the internal
characteristics, the location of the company (Bavagnoli et al.,
2018), and national culture (Vitolla et al., n.d.; Raimo et al., 2019),
the pressures that the company receives from the external sources
affect the IR quality.
However, although stakeholders' pressure influences socially ori-
ented actions, including high‐quality IR, it does not necessarily lead
to a substantial change in the business model and corporate culture.
From this perspective, the real risk is that IR may turn out to merely
represent a formal tool and that the consequent increase in IR quality
may serve only as a response to stakeholders' pressure (Vitolla,
Rubino, & Garzoni, 2016, 2017). The quality of IR does not necessarily
represent integrated thinking. Integrated thinking assumes that the
managerial philosophy and entrepreneurial values are holistic and
based on the following basic convictions: the company has both an
economic and a social role; profit is not placed in a hierarchically supe-
rior position with respect to other corporate purposes; the company
must satisfy, in a synergistic way, the expectations of different stake-
holder groups; and the economic, social, and competitive objectives of
a company must be closely intertwined. The stakeholders' pressure
may increase the quality of reports, but it may not necessarily stimu-
late managers' integrated thinking.
VITOLLA ET AL.
The results of this study provide several implications for managers,
training institutions, and policymakers. First, it is important for man-
agers to consider the key stakeholders and the pressures they exert
when allocating resources to, and in the process of preparing, integrated
reports (Elijido‐Ten et al., 2010; Ellerup Nielsen & Thomsen, 2007).
Second, the integrated reports should not merely be a formal tool.
A company's success is connected to its management philosophy,
which can transform stakeholders' pressures into management oppor-
tunities. Additionally, managers must avoid a boomerang effect that
may result from preparing high‐quality integrated reports accompa-
nied by unethical actions that contradict the expectations of stake-
holders. This circumstance could have a negative impact on the
assessment of the company and worsen stakeholder relationships.
Furthermore, it is advisable for top management to develop a culture
of integrated thinking within the company that pervades business
management and therefore goes beyond the mere formal adoption
of IR.
Training institutions and universities play a crucial role in the
development of a culture of integrated thinking. These institutions
should develop a didactic approach that nurtures skills related to inte-
grated thinking, not limiting the objectives and performances to only
financial aspects.
Another important implication concerns the policymakers. They
must pay attention to the regulations concerning IR. Specifically, on
the one hand, regulations that make the adoption of IR mandatory
may increase the quality of the reports; on the other hand, it could lead
to a mere formal adoption of this instrument that would only represent
an opportunistic response to the laws imposed by governments.
This study is subject to a few limitations such as the constraint on
the choice of stakeholders and the constraint of limited information
for some proxies. However, the limitations of this study can be the
basis for future research. On the basis of the availability of further
information, future studies will be able to test results from this study
by using different proxies. Furthermore, future researchers may con-
sider conducting longitudinal studies and introducing other financial
control variables such as financial leverage and market‐to‐book value.
Finally, future research may analyse the impact of other categories of
stakeholders, such as suppliers and creditors, and the effect of the
mandatory legal status of IR on the quality of reports.
ORCID
Filippo Vitolla https://orcid.org/0000-0001-9887-4897
Nicola Raimo https://orcid.org/0000-0003-1512-4906
Michele Rubino https://orcid.org/0000-0001-7909-545X
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Alfiero, S., Cane, M., Doronzo, R., & Esposito, A. (2017). Board configura-
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