Impression management in financially distressed firms: Evidence from integrated reporting in Australia

This study investigates whether financially distressed firms in Australia utilize integrated reporting (IR) as a tool for impression management (IM) to conceal poor financial performance. Using data from 2015 to 2017, we construct an IR conformity (IRC) index based on the International Integrated Reporting Council (IIRC) framework. We find a non-linear and concave relationship between IRC and firm value among distressed firms: while moderate IR conformity is positively associated with firm value, higher conformity is penalized by the market. Additional corroborative analyses reveal similar non-linear patterns between IRC and bid–ask spreads, crash risk, and earnings management proxies. These findings suggest that distressed firms may strategically adopt IR to manage impressions rather than enhance transparency and that capital markets tend to respond negatively to excessive IR conformity.