INTEGRATION OF NON-FINANCIAL INFORMATION INTO CORPORATE REPORTING: A THEORETICAL PERSPECTIVE

Firms are adopting integrated reporting (IR), despite been voluntary in many countries. Meanwhile, the disclosure of these additional non-financial information (NFI) requires economic, human and capital resources. The question posed is: why do firms spend time and resources to provide information that is not mandated by any standard or law? This study, through a theoretical perspective examines why firms provide voluntary non-financial information. The study adopted a critical literature review research approach. The findings of various studies on IR/NFI disclosure were critically reviewed to identify areas of consensus and areas of peculiarity. The study found that the legitimacy, institutional, signalling and inter-generational equity theories explain the IR practice of manufacturing, mining, petroleum and pharmaceutical industries, whose activities are perceived to have a negative impact on the society and the environment. On the other hand, firms in a service and trading industry, which are perceived to have a little negative impact on the environment and society are shaped by stakeholder, signalling, institutional and agency theories. Besides, strategic theories like legitimacy, institutional, signalling, agency, and inter-generational equity theories explain the integration of NFI into corporate reporting by firms in capital markets or countries that are heavily regulated. This study makes a unique contribution to the literature on corporate reporting, which is in its embryonic stage by identifying and contextualising the various theories underpinning the integration of non-financial information into corporate reporting.