Integrated Reporting Adoption and Its Impact on Stakeholder Decision Making

Abstract

This research investigates the adoption of Integrated Reporting (IR) and its consequential impact on stakeholder decision-making processes, a domain that remains
underexplored despite the growing prominence of IR frameworks. Moving beyond
traditional financial reporting analysis, this study introduces a novel methodological
approach by integrating qualitative content analysis of IR disclosures with a quantitative assessment of stakeholder engagement metrics, thereby creating a hybrid
evaluative model. The primary research question examines how the comprehensiveness and connectivity of information presented in IR influence the cognitive
processing and subsequent decisions of diverse stakeholder groups, including investors, employees, and community representatives. A secondary question probes
the mediating role of information asymmetry reduction in this relationship. The
methodology employs a longitudinal case-study design across three early-adopter
organizations from distinct sectors, combined with a controlled experimental survey distributed to a stratified sample of 450 stakeholders. The analysis utilizes a
proprietary scoring mechanism for IR quality, developed from first principles, which
assesses the depth of connectivity between financial, social, environmental, and governance capitals. Results reveal a non-linear, threshold-based relationship between
IR adoption quality and stakeholder decision efficacy. Specifically, decision-making
accuracy and confidence improve significantly only after IR disclosures achieve a
minimum threshold of strategic connectivity and future orientation, a finding that
challenges linear assumptions in prior literature. Furthermore, the study identifies
a ’narrative coherence’ factor as a critical, previously unquantified mediator that
enhances stakeholder trust more than the volume of data presented. The conclusion posits that the impact of IR is contingent not on mere adoption but on the
achievement of integrative thinking in report preparation, which in turn reframes
stakeholder mental models. This research contributes original insights by delineating the specific mechanisms through which IR transforms information into actionable intelligence for stakeholders, offering a new framework for evaluating reporting
effectiveness that prioritizes qualitative integration over quantitative expansion.