Does Alignment with the IIRF Influence Capital Markets? Evidence from South Africa and the UK

This study examines whether integrated reports that are more closely aligned with the International Integrated Reporting Framework (IIRF) are differently associated with firm value compared to those less aligned. Using panel estimated generalised least squares and other robust estimations, the analysis covers the Top 100 firms listed on South Africa’s Johannesburg Stock Exchange and the United Kingdom’s London Stock Exchange from 2011 to 2018. South Africa presents a mandatory integrated reporting (IR) setting, while the UK adopts a voluntary approach, offering a natural comparative context. An IR quality index was constructed to measure the degree of alignment with the IIRF, and market value of equity and Tobin’s Q are used as proxies for firm value. The results show no evidence of capital market differentiation in South Africa between more and less IIRF-aligned reports. In contrast, UK capital markets may differentiate, with less-aligned reports showing a significant negative association with firm value. These findings suggest that low-quality integrated reports may undermine firm value in voluntary IR settings.