Financial indicators as determinants of integrated reporting quality: evidence from Poland

Purpose The integrated report (IR) presents a comprehensive summary of a company’s situation by combining financial and nonfinancial information. This study aims to examine a broad range of financial indicators that affect integrated report quality (IRQ). Design/methodology/approach The authors surveyed 95 IRs from companies listed on the Polish stock market and evaluated the importance of financial indicators from six areas: profitability, debt, liquidity, the stock market, asset management and the overall financial situation by using a model averaging methodology (i.e. Bayesian averaging of classical estimates). Findings The results reveal a high probability of influence in five of the six financial areas considered. This study identifies 11 indicators that determine IRQ: fixed asset to long-term debt ratio, quick ratio, short-term debt to total debt ratio, sales revenue per share, earnings before interest, taxes, depreciation, amortization (EBITDA) margin ratio, enterprise value/EBITDA, current ratio, operating asset turnover ratio, return on assets, debt ratio and cash turnover ratio. Research limitations/implications The study results contribute to practitioners, academics and society. We present a detailed list of 49 features of IR completeness and accountability as a tool for assessing the IRQ. Academics are highly likely to receive financial indicators that determine IRQ, which are recommended to include in estimated models concerning the exploration of IRs. From a social perspective, the results highlight the importance of ensuring the transparency and high quality of IRs for improving companies’ reputations, better cooperation and reducing information asymmetry. Originality/value The novelty of the research is to use a model-averaging framework by exploring the entire model space of possible models instead of a single model to discover the determinants in terms of probability as an alternative to the significance of the variables. This study analyzed the impact of 33 financial indicators on the quality of IRs disclosing information consistent with the Integrated Reporting Framework. The IRQ was assessed by reading the entire integrated report and scoring 49 features in eight areas.