TY - JOUR
T1 - Textual dimensions of sustainability information, stock price informativeness, and proprietary costs
T2 - Evidence from integrated reports
AU - Barth, Mary E.
AU - Cahan, Steven F.
AU - Chen, Li
AU - Venter, Elmar R.
AU - Wang, Ruili
N1 - Publisher Copyright:
© 2024 The Authors
PY - 2025
Y1 - 2025
N2 - We examine whether integrated report quality, IRQ, is negatively associated with stock price synchronicity, an inverse measure of firm-specific information, and the extent to which the relation between IRQ and synchronicity is attenuated by proprietary costs. We measure IRQ using machine-based textual analysis along four dimensions: textual attributes, topical content, integrated reporting capitals, and financial versus sustainability information. We find that measures of IRQ based on seven textual attributes are negatively related to synchronicity, which is consistent with higher quality text containing more firm-specific content. Using PhraseLDA to identify topics in integrated reports, we find that contents related to the three most common categories—governance, performance, and risks and opportunities—are negatively associated with synchronicity. We find similar results for all integrated report capitals, except manufactured capital. Further, we find that sustainability information has a larger negative association with synchronicity than financial information. We also find that proprietary costs stemming from product market competition attenuate the association between IRQ and synchronicity, which suggests the informativeness of integrated reports varies with a firm's competitive environment. Our results may inform the International Sustainability Standards Board as it considers the role of the Integrated Reporting Framework in developing sustainability standards.
AB - We examine whether integrated report quality, IRQ, is negatively associated with stock price synchronicity, an inverse measure of firm-specific information, and the extent to which the relation between IRQ and synchronicity is attenuated by proprietary costs. We measure IRQ using machine-based textual analysis along four dimensions: textual attributes, topical content, integrated reporting capitals, and financial versus sustainability information. We find that measures of IRQ based on seven textual attributes are negatively related to synchronicity, which is consistent with higher quality text containing more firm-specific content. Using PhraseLDA to identify topics in integrated reports, we find that contents related to the three most common categories—governance, performance, and risks and opportunities—are negatively associated with synchronicity. We find similar results for all integrated report capitals, except manufactured capital. Further, we find that sustainability information has a larger negative association with synchronicity than financial information. We also find that proprietary costs stemming from product market competition attenuate the association between IRQ and synchronicity, which suggests the informativeness of integrated reports varies with a firm's competitive environment. Our results may inform the International Sustainability Standards Board as it considers the role of the Integrated Reporting Framework in developing sustainability standards.
KW - Firm-specific information
KW - Integrated reporting
KW - Non-financial disclosure
KW - Stock price synchronicity
KW - Sustainability reporting
UR - http://www.scopus.com/inward/record.url?scp=85213499868&partnerID=8YFLogxK
U2 - 10.1016/j.bar.2024.101512
DO - 10.1016/j.bar.2024.101512
M3 - Article
AN - SCOPUS:85213499868
SN - 0890-8389
JO - British Accounting Review
JF - British Accounting Review
M1 - 101512
ER -