Integrated reporting, institutional quality, and the environment: A cross-country study

Abstract

This study examines the impact of voluntary Integrated Reporting (IR) adoption on corporate environmental performance and the potential moderating role of institutional quality. Using a staggered difference-in-differences design on a global sample of 459 firms (6,803 firm-year observations) from 2008-2023, we find that the standalone effect of voluntary IR on environmental performance is positive but statistically insignificant. Furthermore, and central to our investigation, we find no statistically significant evidence that institutional quality moderates the relationship between IR adoption and environmental performance. The coefficient for the interaction between IR and institutional quality is negative but insignificant across all model specifications. These insignificant findings suggest that the theoretical proposition of IR acting as a substitute governance mechanism in weaker institutional environments is not empirically supported in this global, voluntary context. The results indicate that the link between voluntary IR and environmental performance is neither direct nor contingently shaped by the broad institutional framework in the ways theorized.