[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/eurman/v40y2022i1p103-126.html
   My bibliography  Save this article

Do nonprofessional investors value the assurance of integrated reports? Exploratory evidence

Author

Listed:
  • Gerwanski, Jannik
  • Velte, Patrick
  • Mechtel, Mario
Abstract
Using an experimental design, this explorative study provides unique empirical evidence of the effects of an integrated reporting assurance (IRA) on nonprofessional investors’ (NPIs) financial decision-making in a laboratory experiment. For this purpose, two independent experiments were carried out, one relying on a sample of Master’s students, and one focusing on managers of large corporations. In line with our agency theoretical reasoning, we find that students value an IRA positively, evidenced through significantly higher investments, while, contrary to expectations, an IRA has the opposite effect for managers. The results reveal that, dependent on the empirical model, an IRA has either no, or even an investment-decreasing, impact on executives. In order to assess the sense-making process underlying this conundrum, subsequent interviews with the managers were carried out which revealed three dimensions that shape practitioners’ critical attitudes towards assurance engagements. First, managers expressed a general disbelief in the decision usefulness of integrated reporting (IR) to (nonprofessional) investors. Second, interlocutors referred to negative practical experiences with audit and assurance engagements and had technical doubts specific to IRA. Third, managers voiced emotional caveats regarding the audit and assurance profession. These findings indicate a prevailing divergence between the extolled theoretical contribution of an IRA to report credibility and its actual nature in practice. In the further course of the investigation, we also find that the assurance provider (Big 4 auditor versus specialized consultant) does not affect investment decisions, but that a higher assurance level leverages investments among students. The results of this study add to the growing, albeit still small, IRA research body and deliver valuable insights for research, regulators, and practice.

Suggested Citation

  • Gerwanski, Jannik & Velte, Patrick & Mechtel, Mario, 2022. "Do nonprofessional investors value the assurance of integrated reports? Exploratory evidence," European Management Journal, Elsevier, vol. 40(1), pages 103-126.
    • Handle: RePEc:eee:eurman:v:40:y:2022:i:1:p:103-126
    DOI: 10.1016/j.emj.2021.03.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0263237321000384
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.emj.2021.03.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Integrated reporting assurance; Integrated reporting; Nonprofessional investors; Nonfinancial reporting; Corporate governance; Managers;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eurman:v:40:y:2022:i:1:p:103-126. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/115/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.