Original Research

Integrated report quality and earnings management – Evidence from South Africa

Anne-Marie Eloff, Shené Steenkamp
South African Journal of Economic and Management Sciences | Vol 25, No 1 | a4581 | DOI: https://doi.org/10.4102/sajems.v25i1.4581 | © 2022 Anne-Marie Eloff, Shené Steenkamp | This work is licensed under CC Attribution 4.0
Submitted: 04 March 2022 | Published: 13 September 2022

About the author(s)

Anne-Marie Eloff, School of Accountancy, Faculty of Economic and Management Sciences, Stellenbosch University, Stellenbosch, South Africa
Shené Steenkamp, School of Accountancy, Faculty of Economic and Management Sciences, Stellenbosch University, Stellenbosch, South Africa


Background: No prescribed standard disclosure requirements for integrated reporting exist. Instead, the International Integrated Reporting Framework is widely adopted, which provides guidelines for integrated reporting to improve the quality of information reported to end-users. These guidelines, however, allow management a degree of freedom in implementing integrated reporting, making the quality of disclosure thereof dependent on management’s approach to reporting. In contrast to the purpose of integrated reporting stands the management of earnings where management can use judgement to manipulate financial reports to mislead end-users. The conflicting theoretical objectives of integrated reporting and earnings management (EM) pose the question of how these two variables relate to one another.

Aim: We examine the association between the quality of integrated reports and EM.

Setting: Our sample consists of 238 company-years from 2013 to 2017 that were listed as part of the Johannesburg Stock Exchange (JSE) top 100 companies and were ranked on Ernst and Young (EY’s) annual Excellence in Integrated Reporting Awards. The likely association between integrated report quality (IRQ) and EM was identified based on theoretical frameworks, including the stakeholder and agency theories.

Method: We perform a robust, one-way cluster regression on our main empirical model, measuring IRQ on rankings, determined by the annual EY Excellence in Integrated Reporting Awards and EM through discretionary accruals.

Results: We find a statistically significant negative association between EM, measured as income increasing accruals, and IRQ.

Conclusion: Results suggest that companies with income increasing EM activities are less likely to disclose higher quality integrated reports.


integrated report; report quality; disclosure quality; earnings management; earnings smoothing; South Africa; mandatory disclosure; discretionary accruals; EY annual Excellence in Integrated Reporting Awards


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