Examining the Link between Integrated Reporting and a Company's Value and the Kind of Disclosure in Pakistan

Objective: The goal of this study is to observe the integrated reporting (IR) disclosure pattern and examine how it relates to a company's worth as measured by its yearly average prices. The study also aims to determine the relationship between integrated reporting and companies’ intrinsic value as reflected by their Price to Earnings ratio in this paper, considerably under the type of disclosure routine in Pakistan.Methodology: This study is quantitative and is based on Ordinary Least Square(OLS) regression analysis of 50 companies listed at the Pakistan Stock Exchange (PSE) in various distinct nonfinancial industries for five fiscal years, from 2017–2021, using 250 firm-year observations. The level of disclosure in corporate annual reports is assessed manually using a standardized integrated reporting disclosure index (IRDIN). The dependent variable for this research model is IRDIN and the independent variable is the firm’s Price. Findings: The empirical findings suggest that the IRDIN is strongly and positively correlated with the considered value measure i.e. Firm’s price. The analysis also revealed that there is an inverse relationship between the organization’s disclosure index and PE ratio. Content analysis reveals a tendency of increased disclosure quality out of the built-in index components by the sample companies.Research restrictions/consequences: A limited sample size could make it difficult to demonstrate the research findings in the proposed disclosure system. It may have an impact on the self-constructed IRDIN index ratings.Practical Implications: Given that the results demonstrate a favorable correlation between companies’ value and the acquisition of this ground-breaking landscape in corporate reporting, capital market authorities can learn important lessons about the viability of implementing IR in Pakistan.Originality/Value: This is a novel attempt to measure and analyze IR through data collected from the nonfinancial industries of Pakistan