Integrated Reporting in the Context of Corporate Governance

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These days, intense market competition, accompanied by socio-economic, scientific and technological development, set advanced requirements for the quality of management of companies. It also requires detailed examination and new approaches to long-term strategic risks. The idea of integrated reporting follows a current vision of a performing entity. Sustainability and corporate responsibility contribute to a company’s reputation in society; the value creation process’s description aims to attract investors. However, the topic is still discussed regarding transparency, stakeholders’ needs, and business ethics.

Integrated reporting remains a debatable topic regarding its benefits and limitations. According to Raluca (2018), a new instrument will ensure effective cooperation of companies with financial markets and a wide range of stakeholders. It is also beneficial for businesses to understand their business model and the factors that create value (Raluca, 2018). One of the main issues is the degree of reporting of the level of corporate governance; therefore, it is crucial to identify major obstacles in the context of Romanian companies listed on the Bucharest Stock Exchange (BSE). Consequently, it is important to determine advantages and weaknesses, along with its possible implementation in business processes.

Summary of the Area of Corporate Governance

Financial reporting is a system of indicators reflecting the assets and financial position of the organization within a specific period. Regarding corporate governance, reporting is the final stage of the accounting process. It is a set of reliable information and performance measures (Larcker & Tayan, 2016). It includes the results of the company’s activities for the reporting interval, being the primary source of information for stakeholders to be familiar with management decisions (Larcker & Tayan, 2016). Integrated reporting differs from traditional reporting as it contains financial and non-financial information (Raluca, 2018).

It is the process of collecting, consolidating and analyzing the qualitative and quantitative indicators of an organization’s activities for the particular period (Vitolla et al., 2019). According to Vitolla et al. (2019), such reporting contains information on the company’s financial standing, its production, intellectual and human capital, its image and reputation in society. The integrated reporting’s primary objective is to show value for an organization over a certain period.


In practical terms, the integrated report concisely contains essential information about the company’s performance. First of all, it is up-to-date information about the corporate strategy, business model and conditions in which the organization operates (Dumay et al., 2017). Besides, it includes historical background, emphasizing public events rather than standard financial indicators (Dumay et al., 2017). In addition, information is provided to better understand the difficulties and risks that the company faces in achieving its strategic goals and assessing its sustainability in the short, medium, and long term.

The company’s activities may be perceived as non-transparent due to a large number of sources of information, the constant complications and an increase in the volume of reporting. Consequently, this issue poses challenges for all stakeholders; the purpose of an integrated report is to avoid confusion and provide clear, concise and understandable information about the company (Vitolla et al., 2019). Dumay et al. (2017) note two principal concepts, such as integrated thinking and value creation. These terms are vaguely defined; hence, they are adaptable so businesses can adjust them according to their needs.

An integrated approach creates conditions for improving the internal processes of forming management decisions to maintain value in the present and the long term. Integrated thinking should promote a comprehensive approach to public reporting and improve the quality of communication between management, investors and other stakeholders. For instance, Raluca (2018) examines organizations belonging to the Standard or Premium category with approximately 500 employees. These companies provide Annual Reports, accompanied by corporate governance and social and environmental responsibility (Raluca, 2018).

Raluca (2018) claims that Romanian businesses in the study try to align with the integrated reporting requirements. They announce financial statements, social responsibility and environmental protection initiatives (Raluca, 2018). Integrated reporting also involves entity perspectives, risk management, data on the company’s governance and the securities market. It is based on the coherence of information, which implies not displaying disparate data on the organization’s activities but providing a holistic picture of the interaction of operating, functional units and the company’s capitals.

However, integrated reporting cannot be considered a perfect tool as there are several problems. Some difficulties are associated with the development and implementation of such a model. One of the main concerns is to what extent it is possible to define the valid information required for reporting. For instance, according to Raluca (2018), the companies do not comply with the new Corporate Governance Code of the BSE on a full scale. Moreover, another study conducted by Dumay et al. (2017) presents an example of South Africa; the country does not have legal requirements for organizations to use an integrated reporting framework. As a result, it is still expected that companies will improve the transparency of their financial and non-financial statements.

The implementation of integrated reporting in practice requires some organizational and behavior changes. For instance, according to Dumay et al. (2017), it is suggested to avoid a desire to show reporting data with the deliberate concealment of failures and problems. This trend negatively affects the transparency of the information provided, consequently diminishing the understanding between the superior management and stakeholders. Moreover, integrated reporting depends on the balance between CEO and board of governance. According to Dumay et al. (2017), companies with more powerful boards tend to pursue such reporting. Thus, the strength of the board and the CEO’s intentions play decisive roles in the disclosures in integrated reporting.

Personal Conclusion

At present, the role of the company’s non-financial risks is increasing; hence, the goal of integrated reporting is to prove to the investor that the organization pays special attention to social and environmental concerns. Moreover, it should be noted that even though not all companies benefit from disclosing information about their financial position in detail, information transparency contributes to effective communication between stakeholders. Therefore, such reporting is becoming a requirement of the current market environment.

General Conclusion

Integrated financial reporting is a relatively new phenomenon in accounting practice worldwide, but it is recognized as an effective tool in communication with stakeholders. It includes financial reporting and information about the company’s business plans in the future and long-term goals (Raluca, 2018). An integrated report should contain the most up-to-date information and historical information about the company (Dumay et al., 2017).

It is suggested to provide information that allows stakeholders to assess the company’s financial stability (Vitolla et al., 2019). The mechanism for creating integrated reporting is not sufficiently developed (Raluca, 2018; Dumay et al., 2017). A large number of sources of reporting information, regular increase and complication of reporting volumes, lack of primary data and the inclusion of immaterial data still cause problems for a wide range of stakeholders.


Dumay, J., Bernardi, C., Guthrie, J., & La Torre, M. (2017) Barriers to implementing the international integrated reporting framework: A contemporary academic perspective. Meditari Accountancy Research, 25(4), 461-480. Web.

Larcker, D., & Tayan, B. (2016). Corporate governance matters: A closer look at organizational choices and their consequences. Pearson.

Raluca, I. O. (2018). Integrated Reporting in the Context of Corporate Governance. Case study on the Adoption of Integrated Reporting of Romanian Companies listed on BSE. Valahian Journal of Economic Studies, 9(2), 127-138.

Vitolla, F., Raimo, N., & Rubino, M. (2019). Appreciations, criticisms, determinants, and effects of integrated reporting: A systematic literature review. Corporate Social Responsibility and Environmental Management, 26(2), 518-528. Web.

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