Does integrated reporting assurance impact investment decision-making? Insight from 100 listed firms in South Africa

Figures & data

Table 1. Research population and sample selection.

Sector	Population 2018	1 or more IR not available	Adjusted population	sample
Banks	8	0	8	5
Chemicals	5	0	5	5
Construction & Materials	13	−2	11	5
Financial Services	40	−2	38	5
Food & Drug Retailers	6	0	6	5
Food Producers	13	0	13	5
General Industrials	7	0	7	5
General Retailers	18	0	18	5
Health Care Equipment & Services	7	−1	6	5
Industrial Metals & Mining	15	−1	14	5
Life Insurance	6	−1	5	5
Mining	18	−1	17	5
Real Estate Investment & Services	11	−5	6	5
Real Estate Investment Trusts	32	0	32	5
Software & Computer Services	8	−2	6	5
Support Services	17	0	17	5
Technology Hardware & Equipment	6	0	6	5
Travel & Leisure	6	0	6	5
Industrial Transportation	5	0	5	5
Oil & Gas Producers	7	−2	5	5
Sectors with less than 5 companies (Co.)	49	0	49	0
Total	297	−17	280	100

Table 2. Regression results of earnings.

	Model with type of assurance			Model with level of assurance
Model	B	t	Sig	B	t	Sig
(Constant)	0.857	1.266	0.207	0.896	1.326	186
Type of Assurance	0.043	0.770	0.442
Company Size	0.204	3.511	0.001***	0.207	3.564	0.000***
Profit Margin	0.136	2.213	0.028**	0.132	2.149	0.032**
Leverage	−0.017	−0.118	0.906	−0.018	−0.126	0.899
Share Price	0.138	2.466	0.014**	0.145	2.619	0.009***
Independence of Assurance Provider	0.282	1.418	0.157	0.263	1.286	0.200
Assurance Level				0.024	0.739	0.461
F-Statistic	4.928***			4.919***
R-Sq adj	0.073			0.073

*** 1%; **5%; *10% significance level.

Table 3. Regression results of dividend yield.

	Model with type of assurance			Model with level of assurance
Model	B	t	Sig	B	T	Sig
(Constant)	1.043	1.663	0.097*	1.055	1.686	0.093*
Company Size	0.113	2.102	0.036**	0.114	2.122	0.035**
Profit Margin	0.142	2.504	0.013**	0.141	2.483	0.014**
Leverage	−0.266	−2.000	0.046**	−0.267	−2.005	0.046**
Share Price	0.162	3.136	0.002***	0.164	3.215	0.001***
Independence of Assurance Providers	−0.012	−0.067	0.946	−0.021	−0.111	0.911
Type of Assurance	0.013	0.259	0.796
Level of Assurance				0.009	0.302	0.763
F-Statistic	4.090***			4.095***
R-Sq adj	0.058			0.058

*** 1%; **5%; *10% significance level.

Table 4. Regression results of number of shares issued.

	Model with Type of Assurance			Model with Level of Assurance
Model	B	t	Sig	B	t	Sig
(Constant)	0.402	0.571	0.568	0.235	0.336	0.737
Company Size	0.139	2.305	0.022**	0.138	2.289	0.023**
Profit Margin	0.173	2.717	0.007***	0.181	2.847	0.005***
Leverage	0.033	0.219	0.827	−0.024	−0.162	0.871
Share Price	−0.023	−0.391	0.696	−0.054	−0.946	0.345
Independence of Assurance Providers	0.485	2.349	0.019**	0.165	0.781	0.435
Type of Assurance	−0.211	−3.658	0.000***
Level of Assurance				0.131	3.936	0.000***
F-Statistic	5.344***			5.717***
R-Sq adj	0.080			0.086

*** 1%; **5%; *10% significance level.

Table 5. Reliability statistics.

Cronbach’s Alpha	No. of Items
0.662	11

Figure 1. Type of assurance by selected 100-listed companies.

Table 6. Assurance practices of selected 100-listed companies.

Type of Assurance
	2018	2019	2020
Scale	No. of companies	No. of companies	No. of companies
1	1	2	1
2	70	61	61
3	7	8	7
4	12	16	18
5	10	13	11
6	0	0	2
Total Companies	100	100	100

Table 7. The extent of the assurance of integrated reports by JSE listed companies (2018).

Type of Assurance		Level of Assurance
Scale	No. of companies	Scale	No. of companies
1	1	1	15
2	70	2	0
3	7	3	0
4	12	4	8
5	10	5	37
6	0	6	9
		7	31
Total Companies	100	Total Companies	100

Table 8. The extent of the assurance of IRs by JSE listed companies (2019).

Type of Assurance		Level of Assurance
Scale	No. of companies	Scale	No. of companies
1	2	1	17
2	61	2	0
3	8	3	0
4	16	4	9
5	13	5	35
6	0	6	7
		7	32
Total Companies	100	Total Companies	100

Table 9. The extent of the assurance of IRs by JSE listed companies (2020).

Type of Assurance		Level of Assurance
Scale	No. of companies	Scale	No. of companies
1	1	1	14
2	61	2	1
3	7	3	0
4	18	4	10
5	11	5	34
6	2	6	7
		7	34
Total Companies	100	Total Companies	100

Table 10. Independence of assurance providers.

Independence of assurance providers
	2018		2019		2020
Scale	No. of companies	%	No. of companies	%	No. of companies	%
1	2	2%	4	4%	2	2%
2	0	0%	0	0%	0	0%
3	98	98%	96	96%	98	98%
Total Companies	100	100%	100	100%	100	100%

Table A1. Likert scale.

No	List	Scale
1	Type of assurance provided	No assurance Assurance of financial capital (FC) only Assurance of financial capital (FC) + 1 extra capital Assurance of FC + 2 extra capital Assurance of financials + 3 extra capital Assurance of all 6 capitals
2	Level of assurance	No assurance / Not mentioned Limited internal audit assurance Reasonable internal audit assurance Limited external audit assurance Reasonable external audit assurance Limited combined assurance Reasonable combined assurance
3	Earnings	Not provided/ Headline loss Decline in headline earnings from the previous year Headline earnings remained constant Increased headline earnings
4	Number of shares issued	Not provided Decline in the number of issued shares from the previous year Number of issued shares remained the same Increased number of issued shares
5	Dividend yield	Not provided/ No dividend Dividend yield on a lower level of less than 2% Dividend yield on a reasonable level of 2-6% Dividend yield on a higher level above 6%
6	Company size	Not provided Decreased total assets Total assets remained the same Increased total assets
7	Profitability	Not provided Profit margin decreased from the previous year Profit margin remained the same Increased profit margin
8	Leverage	Not provided Leverage is high (above 1) Leverage is good (1 or less than 1)
9	Share Price	Not provided Share price decline Share price remained the same Increased share price
10	Independence of the assurance provider	Not provided Assurance provider is/are dependent of the company Assurance provider is/are independent of the company

Table B1. Variables and their descriptions.

Variables	Description
Independent variable:
1. Integrated reporting assurance	Assurance is descried by IoDSA (2016) as a meticulous application of evidence resulting in a claim or statement by an assurance provider relating to a specified item or information for the purpose of enhancing reliance on that item or information.
Proxies:
1. Type of assurance	This study considered the assurance of the capitals because, similar to the auditing of financial information, prior studies have shown that integrated reporting assurance is perceived as the key element of external scrutiny of the non-financial information (Maroun, 2020; Reimsbach et al., 2018; Martínez-Ferrero & García-Sánchez, 2018).
2. Level of assurance	Level of assurance is denoted by two recognised assurance levels, reasonable and limited assurance
Dependent variable:
1. Investment decision-making	Investment is a term associated with financial growth or financial return (Prasetya & Yulianto, 2019; Siyanbola et al., 2019). Thus, investment decision-making is the making of a decision to invest.
Proxies:
1. Earnings	Earnings contribute to a company’s market value and are commonly used to measure a company growth (Gal & Akisik, 2020, p. 1231)
2. Issued shares	Shares are stocks held by investors (Moikwatlhai et al., 2019; Serafeim, 2015)
3. Dividend Yield	Serafeim (2015, p. 31) describes dividend yield as dividends over stock price at fiscal year-end.
Control variables:
1. Company size	Company size is a measure of the company and is measured by different proxies. However, this study chose to adopt the concept to measure company size by total assets.
2. Profitability	Profitability is one of the determinants of investment activity (Ncanywa et al., 2017, p. 50), and is measured by net income and stockholders’ equity (Ruiz-Barbadillo and Martínez-Ferrero (2020, p. 2333).
3. Leverage	A company’s financial leverage refers to the “informational needs of the company’s creditors” (Hummel et al., 2019, p. 745). It is measured by total debts over total equity (Gal & Akisik, 2020; Ruiz-Barbadillo and Martínez-Ferrero 2020).
4. Share price	Musah and Aryeetey (2021, p. 57) describe a company’s share price is a representative of investors’ confidence in the future profitability of the company.
5. Independence of the assurance provider	Assurance providers are required to be sufficiently independent because the cost of compromised independence is significant (Steinmeier & Stich, 2019, p. 183). Assurance providers usually include references on their independence in the assurance statement or report (Hummel et al., 2019, p. 739).

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Data availability statement

We confirm that the data is available upon request. For any enquiries concerning the data used in this study, please feel free to contact Phoebe Mushwana, email: [email protected].