Integrated Reporting as Competitive Advantage for Ukrainian Companies: Determinants vs. Biases

Abstract

Article is aimed at the integrating reporting initiative and ongoing discussion among the parties concerned as to its conceptual framework. The aim of our research was to generalize opportunities and threats of adoption of the integrating reporting (IR) in search of additional competitive advantages by companies. The main question is whether the IR framework really helps to create additional value and to enhance the market structure in Ukraine? To answer the research question a methodology was used, which combined the cognitive theory and the theory of markets evolution with the Porter’s competitive advantages approach. Novelty of this research is an interdisciplinary view on the integrated reporting challenges and opportunities. We found that the IR framework and voluntary practices demonstrate huge potential and mutual benefits for both the parties concerned and the reporters, even with regard on several biases. Cons of the IR originate from eventual cognitive behavioral inclinations, based on diminished financial data and additional space for manipulations, affecting expectations of the parties concerned. In order to minimize negative outcomes of the IR implementation we would recommend external oversight of the issued reports, deeper transparency of business structure and clear development strategy. Further research of the IR should be focused on correction of auditing procedures, common practices in the materiality enhancement, and sectoral opportunities for the IR implementation.