Forward-looking information: does IIRC framework adoption matter?

Purpose: This study aims to examine whether the adoption of the International Integrated Reporting Council’s Integrated Reporting Framework (IIRC Framework) influences the extent of forward-looking disclosures provided by reporters. Design/methodology/approach: This study captures forward-looking disclosures of Australian and New Zealand-based reporters by analysing integrated and annual reports over a period of 10 years from 2010 to 2019 using a machine learning algorithm. This study uses signalling theory to frame the analysis. Findings: This study finds that the adoption of the IIRC Framework has a significant positive impact on the extent of forward-looking disclosures provided by reporting entities. The primary evidence suggests that while listing status alone negatively influences the extent of forward-looking disclosures, the additional analysis reveals that the acceptance of the IIRC Framework by listed entities is positively associated with an increase in forward-looking information. These results remain valid when subjected to a variety of robustness (alternative variables and country fixed effect) and endogeneity (system generalised method of moments and entropy balancing estimations) tests. Practical implications: The findings have practical implications as regulatory agencies (including stock exchanges and standard setters), seeking to promote greater forward-looking disclosures, may want to encourage the adoption of the IIRC Framework. Social implications: The IIRC’s Framework promotes greater forward-looking disclosures benefiting stakeholders who gain a better understanding of the reporters’ future risks and opportunities (including social, economic and environmental risks) and how these are being managed/addressed. Originality/value: This study provides novel evidence by highlighting the role played by the IIRC Framework in promoting forward-looking disclosures.