Integrated thinking on integrated reporting practice: evidence from public listed companies in Sri Lanka

Abstract

Purpose

This study aims to offer empirical evidence on how integrated thinking affects the integrated reporting (IR) practice and how integrated thinking originates from board and management involvement, cross-functional integration and integral link between capitals and strategies.

Design/methodology/approach

This study is cross-sectional and uses a mixed-method approach. The empirical data for the quantitative approach were collected from the 129 public companies listed on Colombo Stock Exchange in Sri Lanka. The personale responsible for preparing the annual report are selected as the respondents of this study. This study used partial least square modelling to test the hypotheses. The quantitative approach results are triangulated across a qualitative research approach in semi-structural interviews with ten responsible officers of integrated reporting practices.

Findings

The central finding of this study is the significant positive relationship between integrated thinking and integrated reporting practice. The qualitative results supported the quantitative findings and show that board and management involvement, cross-functional integration and integral link between capital and strategy enhance the integrated reporting practice. Top management and board management have positive beliefs about the integrated reporting practice; they initiate, encourage, influence, involve and support it. Furthermore, all company departments are involved with the integrated reporting led by the finance department and practice good coordination, communication and collaboration between departments. Moreover, it also evidenced their concern about the linkage between capital and strategy and how they do it in their organisation when practising integrated reporting.

Research limitations/implications

The firms which intend to practice or enhance integrated reporting will be benefited from this study. Hence, this research assists in constructing IT through the direct role of the board and senior leadership, breaking down silos to diffuse IR throughout structures and processes, and concentrating on strategies while managing their capitals and relationships over the long term.

Originality/value

This study provides the initial quantitative empirical evidence on the impact of integrated thinking on integrated reporting practice. To the best of the authors’ knowledge, this study is the first to operationalise both integrated thinking and integrated reporting based on a questionnaire that developed and tested both constructs as higher-order reflective formative and on the relationship between integrated thinking and integrated reporting. The mixed-method approach to examine the relationship between integrated thinking and integrated reporting provides additional insights into the existing literature.

Citation

Abeywardana, N.L.E., Azam, S.M.F. and Kevin Low, L.T. (2024), "Integrated thinking on integrated reporting practice: evidence from public listed companies in Sri Lanka", Journal of Financial Reporting and Accounting, Vol. 22 No. 5, pp. 1085-1118. https://doi.org/10.1108/JFRA-09-2021-0270