Impact of Integrated Reporting on Firm Value of Licensed Banks and Finance Companies in Sri Lanka

The purpose of this study is to synthesize the impact of integrated reporting on the firm value of licensed banks and finance companies in Sri Lanka. This paper develops an informative outcome, covering 20 licensed banks and finance companies for the period from 2015 to 2020. The quantitative approach was employed to generate a multi-dimensional perspective on integrated reporting and firm value. The integrated reporting was measured using content analysis with the support of an integrated reporting index and, the firm value was measured by Tobin’s Q and market to book ratio. The study results revealed that integrated reporting has a significant negative relationship with firm value. As an emerging voluntary disclosure requirement, Sri Lankan licensed banks and finance companies showed a strong motive to follow the International Integrated Reporting Framework in their integrated reporting disclosures. However, Sri Lankan banks and finance companies have failed to gain the supreme benefits of integrated reporting yet. Even though, there are a few studies regarding integrated reporting and firm value, this study becomes one of the dominant studies which strive to explore the impact of integrated reporting on firm value using market-based performance indicators to measure firm value concerning Sri Lanka. Moreover, this study used a self-constructed scoring index to measure integrated reporting in Sri Lanka based on literature. The findings facilitate the practitioners and policymakers about rethinking and revisiting the adoption and the use of integrated reporting effectively.