The International Integrated Reporting Council established the integrated reporting (IR) framework to mitigate the corporate reporting crisis and enhance a holistic stakeholder perspective of value creation. Regardless of its theoretical suggestion, empirical evidence on its commercial values, particularly in emerging economies, remains inconclusive and scarce. This study offers insights into the relationship between IR adoption and firm performance in Malaysia, an environment described as initially low consciousness but with emergent interest. The study adopts a mixed-methods approach, using a quantitative analysis of 756 firm-year observations from Malaysian listed companies to investigate the relationship between IR adoption and market value, cost of capital, and financial performance. This analysis is supplemented by qualitative interviews to scrutinise the perceived usefulness of IR adoption among key stakeholders. Results imply that IR adoption is positively related to market value and negatively related to the cost of capital, reinforcing signalling theory by indicating that increased transparency mitigates information asymmetry and signals firms’ reputation. Nevertheless, its association with financial performance is insignificant. Qualitatively, stakeholders evaluate IR’s usefulness in three perspectives: informational (increasing transparency and durable orientation), interpretative (developing integrated thinking), and decisional (enhancing investor confidence and business reputation). The findings generally indicate that IR’s crucial benefits relate to reputation, stakeholder confidence, and market legitimacy, supporting signalling, stakeholder, and institutional theories, rather than creating short-term financial value. This study provides additional knowledge to the literature by proposing robust, context-specific evidence from a developing economy and postulates important insights for regulators and companies considering IR adoption. The key limitations of this study include limited quantitative analysis and measurements, the use of a binary measure of IR adoption, and scarce stakeholder representation. Future research should employ longitudinal designs to evaluate IR quality over time, study its convergence with new ISSB standards, and examine the interpretation of IR reports by diverse stakeholders.

Research Team:
> Professor Dr Nor Farizal Mohammed C.A.(M) FCCA
> Dr Radziah Mahmud
> Dr Maslinawati Mohamad
> Dr Nurhidayah Yahya
> Associate Professor Datin Dr Norazida Mohamed C.A.(M)
> Nabila Huda Basir C.A.(M), CGMA, ACMA

University: Universiti Teknologi MARA