Explanatory Factors of Materiality Disclosure in the Non-Financial Reporting of European Listed Companies

This study analyses disclosures on materiality in non-financial information (NFI) reporting by examining their likely explanatory factors, including entities’ financial or structural characteristics, governance features, and contextual factors, grounded in a set of relevant theories. Based on archival research and content analysis, this study uses consolidated NFI reports from 2021 of entities listed in the main Euronext indices. The descriptive analysis reveals that while 71% of companies present a materiality matrix, only about half (50%) meet all eight criteria of materiality disclosure, with double materiality being addressed by just 16%. The regression results show that the level of materiality disclosure is significantly and positively associated only with the size of the board of directors, whereas other expected relationships, such as those with firm size, profitability, or debt, were not statistically significant, challenging traditional assumptions from stakeholders, agency, and positive accounting theories. These findings suggest that governance structures may play a more decisive role in transparency regarding materiality than the entities’ financial or structural characteristics. This research contributes to both the academic literature and practice by identifying explanatory factors and empirical patterns in materiality disclosure in NFI reporting, which may be relevant for standard-setting bodies, regulators, auditors, and stakeholders.