Economics Project Topics

Integrated Reporting in Developing Countries – A Case Study of Nigeria

Integrated Reporting in Developing Countries - a Case Study of Nigeria



This research work empirically explored integrated reporting in developing countries -a case of Nigeria. The objectives of this study were to examine the effect of integrated reporting (IR) on corporate performance in Nigeria, evaluate the effectiveness of integrated reporting in addressing fluctuations in corporate performance in Nigeria, to use econometrics models to investigate if a long-run relationship exists between integrated reporting and corporate performance in Nigeria.

The scope of the study was restricted to the use of Co-integration and Ordinary Least Square (OLS). The variables affecting IR that were examined are profit after tax (PAT) as the dependent variable, integrated reporting index (IRI), debt to equity ratio (DER), total assets (TOA). The period of coverage for the study was ten years, from 2010 to 2019 using cross-sectional data. The findings from the study revealed that in Nigeria, IR has no significant impact on corporate performance. Following the findings, it was recommended that organizations should embark on policy measures to review and reveal information; financial and non-financial should be included in corporate reports in a bid to educate relevant entities about the long-term prospects of the firm and its ability to continue in the foreseeable future, government and reporting authorities such as the Financial Reporting Council of Nigeria should mandate firms across all sectors to adopt the IR standard.

Keyword: integrated reporting, organization performance, Nigeria




  • Background to the study

The modern business community considers information as an influential component in a decision-making process (Oprişor 2014). Reporting is thus a crucial aspect of managing companies. Filling the gaps left by the actual financial reporting system in sustaining financial performance and risk management represents a real preoccupation. Financial reporting is often criticized for its focus on historic, quantitative and short-term performance, rather than on long-term creation. Consequently, the concept of Integrated Reporting is founded having as its main goal to clarify and harmonize the relationship between financial and nonfinancial data sustained by the newest technological possibilities (Devi, 2014), as both financial and non-financial information have now become of interest to stakeholders. Emphasizing the connectivity of information represents a primary goal for an integrated report as value creation over time can only be achieved through the interaction between the organization and its external environment. Lord Kelvin, as cited by Kaplan (2010) asserted that financial measurement and record provide immense knowledge about events; this implies that accounting is important in understanding the financial implications of events. In the last century, financial reporting has evolved continuously responding to changes in the business environment and practices.

In the past, the emphasis was on the financial elements of the annual reports prepared based on Generally Acceptable Accounting Principles (GAAP), and this was considered to be a model for reporting. Over the years, financial statements have gradually grown increasingly voluminous and complex due to ever-increasing accounting standards and disclosure requirements. Oladipupo et al. (2013) opined that users of financial information today, need the data that would allow them to assess whether the entity is environmentally, socially and financially responsible. It is expected that businesses should do more than simply turn in financial statements in line with the accounting standards.

The International Integrated Reporting Council (IIRC) (2013) asserted that the world has changed and so must reporting as well to create an integrated approach to corporate reporting to better reflect the multidimensionality and connectivity of today’s globalized world (Adams, 2015). Due to globalization and the growth of non-financial regulation, corporations must take responsibility for their financial and non-financial governance, and other important areas including corporate transparency and accountability, actual and prospective resource scarcity, population growth, and environmental concerns. Information reporting and disclosure are an important part of corporate actions and activities. Over the last few years, Integrated Reporting has emerged as one of the new organizational practice whereby organizational disclosures on social and environmental performance and impacts are incorporated with economic and financial information in one document, Concepts of integrated reporting are being accepted and embraced globally. Eccles and Krzus (2010) in their pioneering book on Integrated Reporting “One Report” identified the benefits for integrated reporting as greater clarity about relationships and commitments, better decisions, deeper engagement with all stakeholders and lower reputational risk. Disclosing financial and non-financial information in a complementary manner enables capital providers to evaluate investment opportunities more effectively and to monitor the use of invested capital more intensively (Healy & Palepu, 2001; Petersen & Plenborg, 2006).

Integrated reporting is gaining the attention of world-leading organizations who are demonstrating global leadership in this emerging field and the IIRC aspires to make integrated reporting the new reporting norm (IIRC, 2013). Integrated reporting is one of the newest additions in corporate financial reporting in the global scene with promised benefits to the company and the stakeholders. Integrated Reporting was launched by the International Integrated Reporting Committee (IIRC) in 2010 (IIRC, 2012), the scope includes strategic focus, connectivity of information, future orientation, responsiveness to stakeholders, and governance and remuneration (Integrated Reporting Committee of South Africa, 2011). Outside Nigeria, there have been mixed results on the studies done so far, while few studies that used empirical data exist in Nigeria.

Companies in developed countries have adopted integrated reporting as their preferred manner of reporting their performance using a single report (Frias-Aceituno et al., 2014). The Pan African Federation of Accountants (PAFA) in conjunction with the World Bank set up the African Integrating Reporting Council (AIRC) to promote the adoption of integrated reporting in Africa. Integrated reporting is a new reporting framework in Nigeria. Prior to 2012, financial reporting dominated the corporate reporting landscape in Nigeria, which began to change when the Nigerian Sustainable Banking Principles were introduced under the auspices of the Central Bank of Nigeria and the Bankers committee in 2012. The Institute of Chartered Accountants of Nigeria (ICAN) inaugurated the Nigeria Integrated Reporting Committee (NIRC). To attract investors, the NIRC was established to complement the federal government’s efforts to align growth in Gross Domestic Product (GDP) with the sustainable development agenda of the government. In Nigeria, since the establishment of the International Integrated Reporting Council (IIRC) in 2010 and the delineation of its framework for reporting in 2013, banks emerged to be the first set of organizations to train its staff to produce integrated reports in collaboration with the Institute of Chartered Accountants of Nigeria (Iyoha et al., 2017). However, some firms do not see the need for IR yet as some other organizations existing in Nigeria are yet to incorporate the IR system (Umoren et al., 2015).

The disclosure of non-financial information and its integration into financial information (integrated reports) and the benefits to the company and other stakeholders is not yet properly assessed. Thus, this study examined the integrated reporting in developing countries- a case of Nigeria.

  • Statement of the problem

Capital market participants rely on a steady stream of information through financial reports to assess risk and judge prospects to accurately value a firm’s equity. However, corporate scandals from creative accounting practices in the past have created a general feeling of distrust around companies’ ability to self-regulate. In addition, there is a concern that the current company disclosures primarily provide information about past performance rather than prospects (Ioannou & Serafeim, 2017).

There are few based empirical analyses in Nigeria of the contents and presentation of publicly available annual reports as to its compliance with integrated reports. Nigeria is reputed as the country with the largest economy in Africa and was quick in the adoption of International Financial Reporting Standards (IFRS) in 2012. The disclosure of non-financial information and its integration with financial information (integrated reports) and the benefits to the company and other stakeholders is not getting proper attention and this should be of concern for a country that reputes itself as the best in Africa, a leading emerging economy and one who intends to be a global player. Integrated reporting (IR) should be the primary source of communicating with shareholders as well as stakeholders. Regrettably, Nigerian companies are not known to have prepared and published any variant of an integrated report (Tijani, Gboyega & Kayode, 2013; Umoren, Udo & George, 2015; Okaro & Okafor, 2017). Most companies in the Nigeria Stock Exchange (NSE) are in the early stages of adopting integrated reporting so that most of the information available about integrated reporting is based on concepts and theories rather than empirical studies.

While IR is gaining increasing worldwide acceptance and research interest, there are not many empirical studies in Nigeria particularly. Prior studies of integrated reporting have been conducted in countries where integrated reporting has already become mandatory or where comply-or-explain reporting has been mandated. Although, findings of many studies, such as Adegboyegun, et al. (2020) and Adegbie, et al. (2019) on the effect of integrated reporting on corporate performance revealed that the major determinant of corporate performance was the integrated reporting index, return on equity, total asset, the subject of which is more effective remained unresolved and had continued to generate much research.

Economists have employed a variety of techniques to solving the problem, but none was entirely satisfactory. One of the techniques was the stakeholder theory, which has the protection of the interest of all relevant parties to a business as its tenet, and another was the agency theory approach deployed, in assessing the effect of integrated reporting employed by Adegboyegun, et al. (2020). But these approaches are not free from the endogeneity problem, particularly when relationships with stakeholders are involved. There is also the problem of choice of appropriate techniques of modelling the effect of integrated reporting. Perhaps the most common technique, and one employed by several studies, including this research, is the KAO-based panel cointegration test. However, the use of KAO-based panel cointegration test in this research differed from previous studies in that it is complemented by the ordinary least square regression model which previous studies seemed to have overlooked. This is to enable the researcher makes a comparison of the results from the estimated models.

Added to the above is the problem knowing precisely, which variable is most effective in addressing corporate fluctuation in Nigeria. Most previous studies seemed to be divided on this issue. Therefore, it is a task for any empirical research on the effect of integrated reporting in Nigeria to identify and assess the various variables through which integrated reporting can influence corporate performance on the one hand and in addressing economic growth issues on the other. This will help in providing understanding on the impact of integrated reporting on corporate performance in the Nigerian economy.

Based on the aforementioned problems, the following research questions were raised for the study:

  • What is the effect of integrated reporting on corporate performance in Nigeria?
  • How effective is integrated reporting in addressing fluctuations in corporate performance in Nigeria?
  • Does a long-run relationship exist between integrated reporting and corporate performance in Nigeria?


  • Objectives of the Study

The broad objective of the study is to evaluate integrated reporting in developing countries – a case of Nigeria. The specific objectives are as follows:

  • To examine the effect of integrated reporting on corporate performance in Nigeria.
  • To evaluate the effectiveness of integrated reporting in addressing fluctuations in corporate performance in Nigeria.
  • To use econometrics models to investigate if a long-run relationship exists between integrated reporting and corporate performance in Nigeria.


  • Justification of the Study

The significance of integrated reporting in ensuring clarity and better decision-making had led to a wide range of research on importance of integrated reporting. The purposes have been to empirically justify the appropriateness of the existing policy at any point in time. This study points out the relevance of integrated reporting to corporations. The significance of integrated reporting in addressing corporation challenges had led to a wide range of research on the effect of integrated reporting on corporate performance.

This study provides a clear, sound and functional understanding of the state of integrated reporting in Nigeria and this could help policymakers in the country to interpret with relative precision, the need for its integration. This study ensures that developing countries are not left behind. As a result, the study focused on a developing country, Nigeria and it examined the annual reports of companies listed on Nigeria Stock Exchange (NSE). The study endeavours to create awareness and impetus for IR in Nigeria by highlighting the existing gaps in the Nigerian IR framework and giving the current IR status by the Nigerian listed companies. The outcome of the study also revealed the strengths and weaknesses of the IR implemented policy in Nigeria. In addition, the study provides a link of causation between integrated reporting and corporate performance.

Furthermore, the study emphasized the need for appropriate weights and emphasis to be placed on ensuring implementation of IR if adequate information about the long-run relationship among the variables is understood from the analysis that was made by researchers.

1.5 Significance of the Study

Efficiency and effectiveness are the major determinants of corporate performance and this may not be achieved without recognizing the need for integrated reporting. This study is essential in discovering the relevance of integrated reporting on corporate performance. The knowledge on integrated reporting revealed in this study will be useful to other scholars and practitioners who may wish to carry out studies on integrated reporting on the Corporation under review and in Nigeria generally.

Furthermore, it will reveal the approaches to integrated reporting implementation that is needed to address the issue of non-implementation of integrated reporting in Nigeria as well as the due processes to be taken to achieve efficiency in the Corporations under review. The study will unveil the benefits of integrated reporting.

Moreover, the recommendations of the study, if strictly adhered to, will improve business performance as well as contribute to the formulation of policies on integrated reporting. Finally, the findings of the study if implemented, will greatly inspire the administration and control of accounting departments to provide adequate measures to resolve the problems of low implementation of integrated reporting in Nigerian. This is because evidence has shown that integrated reporting is associated with increased business performance in corporations, which in turn boost socio-economic and political development.

This study will be of utmost importance to investors, government and the researchers because it will provide policy recommendations to the various Nigerian stakeholders taking adequate measures in the economy for rapid growth and industrialization.  It will contribute to the existing literature on the subject matter by investigating the role integrated reporting plays in economic growth and development of the country. This study will be of benefit to;

The Academia: members of the academia will find the study relevant as it will also form a basis for further research and a reference tool for academic works.

Government: this study will reveal to the government happenings in the economy. Formulation and implementation of policies based on these findings would ensure growth.

Investors: this study shall also be valuable to the investors especially those who may have research interest as it shall guide their private investment decisions.

  • Organization of the Study

The study is divided into five chapters: chapter one embodies the introduction, background to the study, statement of the problem, the objective of the study, research questions, research hypothesis, significance of the study, scope and limitation of the study. Chapter two includes the literature review, integrated reporting: a conceptual clarification, empirical review, theoretical framework and application of the theory to the study, gaps in literature. Chapter three deals with the study area and method of study which includes: introduction, research design, population of the study, sample size and sampling technique, sources of data collection, instrument of data collection, validity and reliability of instrument and method of data analysis. Chapter four deals with the presentation of data, analyses and discussion of findings while chapter five provides the summary, recommendations, conclusion, limitations, and suggestions for additional research on the topic.


WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!