The readability of integrated reports. Issue 4 (2nd October 2017)

• Record Type: Journal Article
• Authors: du Toit, Elda
• Is Part Of: Meditari accountancy research. Volume 25:Issue 4(2017)
• Page Start: 629
• Page End: 653
• Publication Date: 2017-10-02
• Subjects: Readability -- Integrated reporting -- Impression management theory -- Organisational legitimacy theory; M41; Accounting -- Periodicals; Finance -- Periodicals; 657.05
• DOI: 10.1108/MEDAR-07-2017-0165
• Languages: English
• ISSNs: 2049-372X

Abstract

Abstract : Purpose: This is an exploratory study to investigate the readability of integrated reports. The aim of this paper is to assess whether integrated reports are accessible to their readership and add value to stakeholders. Design/methodology/approach: Readability analyses are performed on the integrated reports of all companies listed on the Johannesburg Stock Exchange for 2015 and 2016. Readability results are compared by means of a correlation analysis to the results of the Ernst & Young Excellence in Integrated Reporting Awards for 2015. Findings: The results show that the complex nature of the language used in integrated reports of listed companies impairs readability and, as an implication, affects the value stakeholders can derive from the information. The results from the correlation with the Ernst & Young Excellence in Integrated Reporting Awards indicate that an integrated report is considered of higher quality if it is written using complex language. Research limitations/implications: The main limitation of the study lies in its exclusively South African setting, which is the only country where integrated reports are recommended as part of stock exchange listings requirements. Another limitation is the fact that integrated reports are mainly aimed at informed users and is thus compiled with the informed reader in mind, which impacts on general readability. Practical implications: The results present new findings regarding integrated reporting practice, which is of interest to firms, investors, regulators, amongst others. The findings show how the value-added by integrated reports could be improved. Originality/value: This study is the first to investigate the readability of integrated reports in a South African context. The results indicate that integrated reports are difficult to read and are only useful to a portion of the total intended population.