The impact of institutional ethics and accountability on voluntary assurance for integrated reporting

Purpose The purpose of this paper is to investigate whether the ethics and accountability environment influences the voluntary assurance demand for integrated reports through the lens of institutional theory. Design/methodology/approach This study used an international sample of 192 companies that have registered in the International Integrated Reporting Council's (IIRC) early examples database and that published integrated reports during the years 2011-2016. Binary logistic regression as well as Instrumental Variables (IV) regression with Probit and GMM estimators were employed to test the proposed hypotheses. Findings The results confirm that assurance of integrated reports serves as a response to the absence or incompetence of formal and informal institutions that facilitate private contracting. Specifically, the authors found that firms tend to assure their integrated reports in business environments that are characterized by weaker ethical behaviors, less effective boards, poorer auditing and reporting standards, and insufficient protection of the rights of minority shareholders by the legal system. Originality/value This study adds to the understanding of institutional factors that impact the assurance of integrated reports which has been rarely examined by prior research. In particular, this is one of the few attempts to examine the link between institutional ethics and accountability environment and the voluntary assurance demand in an international context.