Voluntary and Mandatory Adoption of Integrated Reporting: Insights into the Role of Regulatory Intervention

Amid growing regulatory intervention in Integrated Reporting practices, this study examines the long-term effect of adopting Integrated Reporting guidelines on firms' Integrated Thinking and Reporting (ITR) performance in voluntary and mandatory adoption contexts. To this end, the analysis focuses on two integrated reporting regimes: (1) corporate South Africa, where Integrated Reporting has been mandatory since 2010, and (2) the voluntary adoption of the International IR Framework globally. The analysis further links the impact of South Africa's mandatory Integrated Reporting model on ITR performance to the strength of the regulatory environment, identifying a condition under which regulatory intervention may drive widespread and persistent positive change in the corporate sector. A causal framework for policy evaluation based on heterogeneous Difference-in-Differences methods is employed to account for firm - and country-level heterogeneity. The findings reveal that mandating Integrated Reporting in South Africa significantly enhanced firms' ITR performance, with effects persisting over time and influenced by the strength of the regulatory environment. In contrast, voluntary adoption under the International IR Framework primarily attracted firms that were already strong performers, suggesting that such adoption likely functioned as a signalling mechanism to communicate existing ITR practices to stakeholders. These empirical insights advance the discourse on the differential effects of mandatory and voluntary reporting regimes, holding particular relevance for the evolving dialogue on the role Integrated Reporting may play within the corporate reporting arena. Among other stakeholders, the implications of these findings are relevant to standard-setters and national and transnational regulatory bodies.