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Integrated
Integrated reporting disclosure reporting
alignment levels in annual reports
by listed firms in Vietnam
and influencing factors 1543
Huu Cuong Nguyen, Phan Minh Hoa Nguyen, Bich Hiep Tran, Received 9 February 2020
Revised 28 September 2020
Thi Thien Nga Nguyen, Le Thanh Thuy Hoang and 11 February 2021
29 April 2021
Thi Thu Hien Do 6 June 2021
Accepted 7 June 2021
Faculty of Accounting, University of Economics, The University of Danang,
Danang, Vietnam

Abstract
Purpose – This paper aims to examine the levels of integrated reporting disclosure alignment in annual
reports by listed firms in Vietnam and the factors influencing these disclosure levels.
Design/methodology/approach – Drawing on a sample of 200 listed firms in Vietnam in 2017, the
authors constructed a disclosure index based on the content of the International Integrated Reporting
Committee (IIRC) Framework. Using this index, the study measures the extent to which Vietnamese listed
firms’ annual reports include the content elements required by the integrated reporting (IR) Framework. The
study performs ordinary least square regression to investigate the influencing factors.
Findings – The study documents that, on average, Vietnamese listed firms disclose about 43% of the
information required by the IIRC Framework. The disclosure levels are positively associated with manufacturing
firms, board independence, foreign ownership, government ownership, audit quality and firm size.
Originality/value – Integrated reports have been widely adopted in many countries, but it is still a new
issue in Vietnam. This is the first paper providing some insights into the inclusion of the content elements
required by the IR Framework by listed firms in Vietnam. It also contributes to the disclosure literature by
providing empirical evidence on the factors influencing these disclosure levels. Deriving from the findings, the
authors offer recommendations for policymakers on the issue of regulating and implementing IR in Vietnam.
Keywords Annual reports, Integrated reporting, Voluntary disclosure, Sustainability reporting
Paper type Research paper

1. Introduction
The United Nations Framework Convention on Climate Change, which was opened for
signature from 4 to 14 June 1992 at the Earth Summit in Rio de Janeiro, expressed interests in
the future of the economy, environment and countries owing to global climate changes. Modern
societies encounter difficult challenges, including climate change, loss of biodiversity, depleted
resources, globalization and social imbalance (Stiglitz, 2002). Investors are concerned with
financial, non-financial performance and the impact, which their investments and resulting
activity will have on the environment and society (Abeysekera, 2013).
Integrated reports present some similarities with annual reports and sustainability
reports, whilst adding some more relevant information, intended to overcome the limitations Meditari Accountancy Research
Vol. 30 No. 6, 2022
pp. 1543-1570
The authors would like to thank the editor and reviewers for their comments and suggestions that © Emerald Publishing Limited
2049-372X
greatly helped improve the manuscript. DOI 10.1108/MEDAR-02-2020-0710
MEDAR of these two forms of reporting (Busco et al., 2013). In addition, Owen (2013) indicates that
30,6 some perceived deficiencies can be addressed by one report when integrated reporting (IR)
becomes a mainstream reporting model. IR attempts to incorporate the reporting of different
aspects of a firm’s activities on a general framework with a united objective (KPMG, 2011).
IR is a response to the difficulties that firms encounter to generate value and the related
interests of stakeholders of receiving useful information relevant to decision-making on the
1544 firms’ potential for future value creation (Haller and van Staden, 2014). One report is similar
to a mean that represents a primary change in how managers consider the possibility of
strategy and value creation – and also what and how they respond to stakeholders (Higgins
et al., 2014). An integrated report provides the overall story of the firm including strategy,
achievements and operations which allow stakeholders to evaluate its capability to generate
and maintain value over the short, medium and long-term (Integrated Reporting Committee
of South Africa, 2011).
The International Integrated Reporting Committee (IIRC) develops the concept of IR that
stems from the goal of a world in integrated thinking and reporting of business operations.
The objective of the report is to focus on how firms allocate capital and their behaviour in
achieving its goals of financial stability and sustainable development. IR requires firms to
have an integrated mind-set. IR enlarges the information reported and shows a
comprehensive picture of an organisation by using a wider range of sources of information
than the current reports (García-S
anchez et al., 2013; Owen, 2013; Silvestri et al., 2017). This
report stresses the significance of connective and multidimensional reporting, which
provides data on the determinants affecting the firm value (Atkins and Maroun, 2015). This
kind of report offers a reorientation that stresses both qualitative data (such as employee
morale, organisational reputation and customer satisfaction) and quantitative data (such as
revenue, cash flows and tax payments) on performance (Adams and Simnett, 2011).
Moreover, as accountants are directly involved in the production of the corporation reports;
they play a critical role in making the reporting practices changes (Adams, 2015). Many
firms, through the integrated reports, expect to communicate with stakeholders on all areas
of their business activities, model and strategies (Camilleri, 2018).
Prior studies have documented that the level of information disclosure in interim and
annual reports by listed firms in Vietnam is still relative low (see, for example, Nguyen and
Le, 2018). In Vietnam, corporate reporting practices are monitored by the Enterprise Law
2014, the Law on Accounting 2015, the Law on Securities 2010 and Vietnamese Accounting
Standards. The Accounting Standards promulgated by the Ministry of Finance, from 2001
to 2005, have not been updated or revised. Vietnam could be a typical example of a country
with a strict periodic disclosure mechanism providing that listed firms are obligated to
prepare a separate set of (four) quarterly financial reports, half-yearly financial reports and
annual reports. In addition to the requirements for the audit of annual financial reports, a
review of half-yearly financial statements by external auditors is also compulsory. Listing
and disclosure rules are very condensed and governed by a Circular issued by the Ministry
of Finance rather than by the State Securities Commission. Further, company accounting
and reporting practices are heavily influenced by enterprises accounting policies. Such
reporting environment may influence information disclosure behaviours by listed firms in
the way that they tend to focus more on mandatory disclosure than voluntary disclosure.
Regarding sustainability reporting, listed firms in Vietnam have been required to
disclose certain environmental and social information in annual reports since 2016. The
disclosure includes management of materials, energy consumption, water consumption,
compliance with the regulation on environmental protection, policies related to employees,
responsibility for a local community and green capital market activities (Ministry of
Finance, 2015). According to that disclosure regulation, firms in the financial sector are not Integrated
required to provide information on the first three content elements. Firms can disclose such reporting
information in annual reports (as appendices) or in stand-alone reports. However, the State
Securities Commission of Vietnam observes that such disclosures are still very limited.
Moreover, IR is a topical issue and shows its benefits to the financial market, but has not
been regulated in Vietnam such as the other countries except for South Africa (Atkins and
Maroun, 2015; Barth et al., 2017; Burke and Clark, 2016; Soriya and Rastogi, 2021). IR is
deemed to be a critical tool in implementing corporate social reporting, whereas practising 1545
CRS in Vietnam is still challenging and limited (Huang et al., 2019; Lambooy et al., 2014).
Besides, prior research suggests that more research should be conducted to contribute to
understandings of the way to apply IR in practice, the applicability of the IIRC Framework
and the extent of integrated reporting disclosure (IRD) levels (Bernardi, 2020; Manes-Rossi
et al., 2020; Maroun, 2017; Naynar et al., 2018; Rinaldi et al., 2018; Stent and Dowler, 2015).
In search of a new format of corporate reporting that could improve the information
disclosure and brings more benefits to users of firms in Vietnam, this study addresses the
following two research questions:

RQ1. To what extent do Vietnamese listed firms’ annual reports include content
elements required by the IR Framework?
RQ2. What factors influence the IRD alignment level for Vietnamese listed firms?
By examining the level of information disclosure in annual reports of listed firms based on
the IIRC Framework (i.e. the IRD alignment levels) and identifying factors affecting the level
of information disclosure, this research provides several significant contributions to the
disclosure literature. The findings on the levels of IRD alignment contribute to research gaps
in the field of corporate reporting in Vietnam and is relevant to policymakers in considering
the adoption of IR in Vietnam.
With the average IRD alignment level of 40%, Vietnamese listed firms are promising to
adopt the requirements for a new form of corporate reporting such as IR in an emerging to
bring more benefits for the users and improve the information disclosure to the emerging
capital market. Further, the findings on the positive influence of the manufacturing
industry, board independence, foreign ownership, government ownership, audit quality
(proxied by Big-4 auditors) and firm size may guide the policymakers into the selection of
firms and related corporate governance attributes to target when considering the
implementation of IR in an emerging economy such as Vietnam.
Our study also provides empirical findings on the determinants of IR as conceptualised
by de Villiers et al. (2017) including organisational features (size, ownership structure and
corporate governance) and external factors (industrial sector and audit quality). Further, the
findings of our study complement and extend the findings of a recent study by Kılıç and
Kuzey (2018a) on IRD alignment levels and the influencing factors. As such, our research
enhances the understanding of IR practices in emerging economies by offering empirical
findings that bridge the literature gaps concerning the adherence of traditional company
reporting to the IIRC Framework. This research also provides empirical evidence on the
possibility of adoption integrated thinking and reporting in a developing country such as
Vietnam.
The remainder of the study is organised as follows. Section 2 reviews the literature that
includes the brief history of IR, an overview of IR studies and theoretical and IR
frameworks. Section 3 describes the research methodology. Section 4 provides research
results and implications. The study concludes with Section 5.
MEDAR 2. Literature review
30,6 2.1 Importance and development of the integrated report
The framework for IR has been in development for the past three decades (Stent and Dowler,
2015). Even though the reporting regulation and practice has been advanced, there has been
still areas that would be improved to enhance the usefulness and relevance of information
disclosure. The disclosure literature shows the existence of the gaps and discreteness in the
1546 firm reports, the limitations of traditional financial reporting and the complexities within
sustainability reporting of the firm (Beerbaum et al., 2019; Naynar et al., 2018). There has
been a lack of a framework and standards for presenting non-financial information that
would help investors compare firms’ performance; or other information that may be less
important and reliable but be useful to decision-making users (Gianfelici et al., 2018). IR was
first introduced in 2012 and it has as become a hotly contested area of research and dispute.
Table 1 below summarises the timeline of IR development.
One of the official initiatives could be the formation of the Prince’s Accounting for
Sustainability Project (also known as A4S) in 2004 with the aim to address this disconnect
for many readers of sustainability reports (de Villiers et al., 2014). It is argued that a more
integrated and balanced approach to corporate reporting was recommended in the 1970s
(Owen, 2013). This means that IR has appeared early but it exists in another form. In later
years, before being named an integrated report, “connected reporting” was used to connect
the major social, environmental and economic actions, the outputs and raw materials
consumption for reporting entities (Hopwood et al., 2010).
On 11 September 2009, a meeting took place at Jame’s Palace in London with the
participation of researchers, investors, standards setters, firms, accounting bodies, UN
representatives and members of civil society to discuss how to integrate financial and non-
financial reporting in the most effective way (Eccles and Krzus, 2010). It is argued that
current reports, namely, financial reports or even sustainable development reports, do not
provide enough information needed to address environmental or social issues. Traditional
public reporting has a dominant orientation towards the analysis of the past and present
results of the organization. However, this type of financial reporting focus on short-term and
retrospective performance; therefore, it does not provide adequate information for decision-
making users (Nakib and Dey, 2018). Accordingly, it is necessary to have a report such as an

Time Event

2004 The prince’s accounting for sustainability project established

2007 A4S’s connected thinking framework launched
2008 A4S Forum consisting or international organizations and 19 international
accounting bodies started
2009 A4S’s connected reporting – a practical guide with worked examples released
2009 Sep–Dec Proposal to convene the IIRC (previously International Integrated Reporting
Committee) to create generally accepted connected and IR framework
2010 Aug The IIRC established
2011 Sep– Dec Discussion paper entitled “Towards Integrated Reporting: Communicating
Value in the 21st Century”
2012 Jul Draft outline of the IR framework issued
2012 Nov Prototype of the International IR framework
2013 Mar–Jul Background papers for IR released
Table 1. 2013 Apr Pilot programmer investor network launched
Timeline of the 2013 Apr–Jul Consultation draft of the International IR framework exposure period
development of IR 2013 Dec International IR framework released
integrated report built into the foundations of financial, management commentary, Integrated
governance and remuneration and sustainability reporting in such a way that their reporting
interdependence.
IR provides a challenge to the traditional annual report, with its distinct focus on the link
between strategy and value creation. The A4S created a linked reporting framework in 2007
and reporting guide in 2009, which explains and illustrates methods in which different areas
of organizational performance presented in a connected, integrated way with traditional
accounting information, thereby providing a better insight into an organization’s strategic 1547
objectives and its sustainability (Soh et al., 2015).
From September to December 2011, the IIRC had published a discussion paper intending
to create a forum for international institutional collaboration to establish a roadmap for the
further evolution of IR (IIRC, 2011). The IIRC (2011) sets out several guiding principles that
underpin integrated thinking and reporting. IR aggregates all useful information together
that allows firms to tell their own stories of strategy, core activities and performance;
thereby enabling information users to make better decisions.
The development of IR shows that the shift to “one report” promises to meet the needs of
reporting users for more useful information. Hoque (2017) comments that IR brings external
market benefits, which including meeting the needs of mainstream investors who inquire
about environmental, social and governance information, and ensuring that reporting
entities disclose accurate non-financial information. Risk management is also one of the
required dimensions that brings value for IR whilst ensuring that its implementation is
practical for a wave of global regulation, meets the requirements from stock exchanges and
has a seat at the table when developing frameworks and standards (Eccles and Armbrester,
2011). Besides, IR also ensures that the information circulation amongst different parts of
the firm is fully and freely, creating many opportunities to improve information flows and a
better understanding of value creation in small and medium firms (de Villiers et al., 2014).
In addition, it is the necessity of getting senior managers, board members and
accountants to promote long-term thinking about the firm’s business model and to use IR to
provide key stakeholders with value-creation based information (Adams, 2015). Moreover,
for well-performed firms, a comprehensive report on the above issues will enhance the
transparency and reliability of the information provided to investors, which will have the
opportunity to attract both domestic and international investors. Prior research advises that
firms publishing IR show a clear tendency to have more long-term, “dedicated” holders and
fewer transient investors (Serafeim, 2015). Such potential usefulness suggests that IR has
pulled the traction force in both the firm community and investors. More interestingly,
García-S
anchez et al. (2020) research advises that IR is an ideal tool for disseminating
information related to the Covid-19 pandemic thanks to the principles-based approach of the
IIRC <IR> Framework. Hence, adopting IR warrants a new tool for corporate governance
that will help the boards of the firm in terms of stakeholder engagements, risk management,
legitimate responsibilities for transparency and demonstration of sustainability with linking
(Hoque, 2017).

2.2 Integrated reporting disclosure studies

A large number of sustainability reporting studies have been published, primarily focussing
on examining the internal and external drivers of reporting and the type and level of
disclosure and mainly drawing upon analyses of reports and formal documents rather than
engaging directly with firms (Fifka, 2013). Much less thought has been devoted to the
internal processes of developing and generating sustainability reports and even fewer
studies have investigated the emerging phenomenon of IR. Research into IR has been limited
MEDAR to theoretical investigations and stand-alone case studies (Jensen and Berg, 2012). There is
30,6 little evidence on why firms pursue IR, which approaches and internal mechanisms early
adopters use to implement it, whether it is driving organizational change at this early stage
and the determinants of IR disclosure. Our study contributes to the literature by identifying
factors influencing IRD alignment levels.
An increasing number of studies have investigated issues related to IR although this is in
1548 its early stages (de Villiers et al., 2017; Dumay et al., 2016; Velte and Stawinoga, 2017). A
comprehensive view of the integration report from the definitions and information elements
required to a framework of a complete integrated report is developed by Abeysekera (2013).
Many other studies contribute to the debate from a critical perspective by indicating out the
challenges and deficiencies in IR (Adams, 2015; Adams and Simnett, 2011; Chaidali and
Jones, 2017; Cheng et al., 2014; de Villiers et al., 2014; Dumay et al., 2017; Flower, 2015;
McNally et al., 2017; McNally and Maroun, 2018; Naynar et al., 2018). Besides, interviews or
surveys have been used to gather information about the perception of different stakeholders
such as firm management, financial analysts, professional service firms, regulatory bodies
and academics on adopting IR (Abhayawansa et al., 2019; Atkins et al., 2015; Burke and
Clark, 2016; Guthrie et al., 2017; Higgins et al., 2014; Naynar et al., 2018; Steyn, 2014; Stubbs
and Higgins, 2014, 2018; Van Bommel, 2014).
As IR is mandatory for listed firms in South Africa, many prior studies have been
examined in that country context and provided empirical evidence of a regulatory
environment for IR (Ahmed Haji and Anifowose, 2016, 2017; Clayton et al., 2015; Hindley,
2012; McNally et al., 2017). Furthermore, many research studies have shown the motivation
to provide IR (Frías-Aceituno et al., 2013; Jensen and Berg, 2012; Rivera-Arrubla et al., 2017).
Recent studies in South Africa reveal that firm size, firm profitability and firm leverage have
a positive impact on the level of IRD (Marrone and Oliva, 2020); and external assurance and
the underlying accounting infrastructure are the most relevant drivers of IR quality (Malola
and Maroun, 2019). However, it is worth noting that there is a research gap in evaluating
IRD (alignment) levels, as highlighted by Manes-Rossi et al. (2020). Our study bridges the
gap by assessing IRD alignment levels in annual reports.
IR is a relatively new area of policy and practice and organisational practices in this area
have therefore had to develop rapidly. IR has also attracted a great deal of academic
attention and a body of literature is beginning to grow. As a quickly emerging accounting
regulatory arena, studying IR provides an opportunity to examine many aspects of the
development of accounting regulation over a much shorter period than has typically been
the case for financial accounting standards. It may therefore be possible for individual
studies focussing on IR to provide a richer and more holistic picture of the development of
reporting regulations than when studying financial accounting standard-setting. As
academic interest in IR continues to grow, documentation of initial advances in IR – along
with a range of insights into aspects of IR – can provide researchers with a solid foundation
upon which to build their future studies. It can also offer regulators and reporting entities
with valuable insights to help inform further development of policy and practice.

2.3 Theoretical and integrated reporting frameworks

As soon as IR was initiated, many pioneering firms have prepared and published this type
of report. However, each firm already has its own set of reporting frames and there is no
consistency between the information disclosures. As such, it just combines multiple reports
into one report, which is deemed to be IR (Abeysekera, 2013). Previous studies have explored
the influence of firm characteristics on forward-looking disclosures, which is explained by agency
theory (Jensen and Meckling, 1976) and signalling theory (Spence, 1973). Kılıç and Kuzey (2018b)
state that firms should report a higher level of the forward-looking information to diminish Integrated
information asymmetry and agency costs, which will maintain a better evaluation of the reporting
future outcomes of firms. The question is how firms can compile information in one single
platform and express the value that the business has created.
Prior research discusses different theories advocating for IR. In most studies, agency
theory is the most frequently applied theory. However, this is not the only theory supporting
the implementation of IR or explaining the reasons why firms should prepare an integrated
report. The other relevant theories are stewardship, institutional, stakeholder and legitimacy
1549
theory (Arul et al., 2020; Camilleri, 2018; Contrafatto, 2014; Contrafatto and Burns, 2013;
Higgins et al., 2014; Rivera-Arrubla et al., 2017; Stent and Dowler, 2015; Steyn, 2014; Stubbs
and Higgins, 2018; Wang et al., 2020). Demonstrating and enhancing stewardship for the
broad base of capitals is one of the aims of IR (IIRC, 2011, 2013). The IR literature also calls
for future research to apply stewardship theory to examine the disclosure behaviours of
managers (Dumay et al., 2019). Cross-country studies explain the positive influence of
several country-level determinants on the adoption of IR by applying institutional theory
and stakeholder theory (Frías-Aceituno et al., 2013; García-S
anchez et al., 2013; Jensen and
Berg, 2012; Rivera-Arrubla et al., 2017; Vitolla et al., 2020). Within-country studies identify
the effects of certain firm-level factors on IR such as assurance, board characteristics, firm
size, industry sector and ownership structure by using different theories including agency,
legitimacy and stakeholder (Altarawneh and Al-Halalmeh, 2020; Barako et al., 2006;
Buitendag et al., 2017; Frias-Aceituno et al., 2014; Frías-Aceituno et al., 2013; Mohd Ghazali,
2007; Pavlopoulos et al., 2017; Raimo et al., 2020; Vitolla et al., 2020).
An IR framework should define items firms need to disclose in an integrated report.
Abeysekera (2013) proposes a template for IR in organizations and indicated how to prepare
one report to meet the need of stakeholders. He set out the content with a unified structure
from the title, the abstract and the introduction to the conclusion. Instead of listing the
elements and explaining them tediously, he described the coherence of narrative, numerical
and picture of Jesus on the cross. He claims that if we combine narratives, number and
visuals together, we will make a greater impact on IR. He also provided a sample template
for an integrated report. Abeysekera (2013) suggests that IR should commence with the
vision of firms. This is reasonable because by doing so, the stakeholders could see a firm’s
aims and overall strategy. Apart from that, based on the firm’s vision, stakeholders can also
consider whether the firm performance follows their vision or not. For the elements of an
integrated report, he recommended that firms should address in one report the values and
the action context in the future.
The common IR framework implemented by most of the pioneer firms and early adopters
is the IIRC <IR> model, which is also referred to by the mainstream literature. This is a
voluntary framework to report six different resources and relationships of different
members or capitals, providing a comprehensive situation of the firm (IIRC, 2013). In this
study, we measure the quantity of information disclosure in Vietnamese listed firms’ annual
reports based on the content of the IIRC <IR> framework and examine the characteristics
of the business affecting the publication of the information elements in alignment with the
IIRC Framework.

3. Research methodology
To address the first research question, this study constructs an index to measure the amount
of information disclosure (IRD level) in Vietnamese listed firm’s annual reports adhere to the
IIRC <IR> framework. Accordingly, this research develops and tests six hypotheses to
MEDAR provide empirical evidence on the influencing factors of the IRD levels by Vietnamese listed
30,6 firms to address the second research question.

3.1 Hypothesis development

3.1.1 Hypothesis one – industry type. Information provided by firms across industry sectors
is likely to be different partly because of different applicable rules and regulations on
1550 disclosures. Further, firms in a specific industry sector may apply additional disclosure
requirements than those mandatorily required for all industries; therefore, disclosure extent
varies across business sectors (Gallery et al., 2008; Street and Gray, 2002; Wallace et al.,
1994).
There have been many disclosure studies using the type of industry as an independent
variable to measure the level of voluntary disclosure of firms. Wallace et al. (1994) reveal
that there are significant differences between industrial firms and non-industrial ones in
operating activities and reporting practices. Further, the study of Cohen et al. (2012)
indicates that there was an impact of industrial operations on information disclosure of non-
financial firms. Stanga (1976) documents a positive relationship between industry type and
the extent of corporate information disclosure.
The association between industry sectors and IRD and IR quality is explained by
legitimacy theory and confirmed by prior studies (Buitendag et al., 2017; Gerwanski, 2020).
By contrast, recent studies fail to show this relationship (Altarawneh and Al-Halalmeh,
2020; Kılıç and Kuzey, 2018a; Songini et al., 2020). The inconclusive results could be because
of the inconsistency in industry classification and ask for further research with a larger
sample (Mohd Ghazali, 2007; Songini et al., 2020).
In Vietnam, as noted earlier, listed firms are mandatory to disclose certain information on
social and environmental impact in annual reports. The compulsory disclosures on material
management, energy consumption and water consumption are likely more related to
manufacturing firms. It is therefore proposed that:

H1. There is a difference in the level of IRD between manufacturing firms and non-
manufacturing firms.
3.1.2 Hypothesis two – board independence. Evidence of the association between the
proportion of non-executive directors on the board and corporate disclosure has been
provided by many prior studies. In particular, independent directors play a critical role as
monitors of management performance and actions (Brickley and James, 1987; Fama and
Jensen, 1983; Pearce and Zahra, 1991; Weisbach, 1988). Independent directors are perceived
as a tool for monitoring management behaviour (Rosenstein and Wyatt, 1990), resulting in
more voluntary disclosure of corporate information. Similarly, Forker (1992) finds that a
higher proportion of independent directors on board improved the monitoring of the
disclosure quality and reduced the gains of withholding information. Consistent with
agency theory, prior studies reveal the positive influence of board independence on
environmental, social and governance disclosure (Özcan, 2020) and on IR quality (Vitolla
et al., 2020).
In Vietnam, to the best of our knowledge, there are no identified prior studies of IRD.
Whilst there is empirical evidence that board independence is positively associated with risk
management disclosure in annual reports (Nguyen and Vo, 2018) and discretionary
disclosure in interim reports (Nguyen and Duong, 2019). Further, according to Decree
71/2017/ND - -CP, the minimum number of independent members of a listed firm is one-third
of the total members of the board. This requirement suggests that the government realises
the importance of board independence in controlling the listed firms that may enhance
information disclosure. Taking all the above together and in the light of agency theory, it is Integrated
therefore proposed that: reporting
H2. There is a positive relationship between the proportion of independent directors and
the level of IRD.
3.1.3 Hypothesis three – foreign ownership. Prior studies have found a significant positive
relationship between the percentage of foreign ownership and the level of voluntary 1551
disclosure (see, for example, Barako et al., 2006; Haniffa and Cooke, 2002). The expansion of
trade, the privatization of firms and the establishment of Hanoi stock exchange (HNX) and
Ho Chi Minh Stock Exchange (HOSE) has helped Vietnamese firms to approach foreign
investors more conveniently. Disclosing financial and non-financial information of listed
firms in well-established capital markets in developed countries is increasingly being
regulated more strictly. The advances in developed financial markets affect foreign investors;
and therefore, they also expect Vietnamese listed firms to disclose more information to meet
their needs. In the area of IR, Raimo et al. (2020) suggest examining the influence of foreign
ownership on IRD. The latest survey by KPMG highlights that foreign investors drive
corporate responsibility reporting (KPMG, 2017). However, Altarawneh and Al-Halalmeh
(2020) find that foreign ownership has no impact on the disclosure of IRD alignment levels.
Following previous research findings, it is likely that foreign investors can influence
corporate disclosure practices of firms listing on a developing country where the disclosure
regime is still weak. Hence, ownership by foreigners can be a significant determinant of the
level of IRD. In the light of agency theory, it is therefore proposed that:

H3. There is a positive relationship between the percentage of shares held by foreigners
and the level of IR disclosure.
3.1.4 Hypothesis four – government ownership. Prior researchers indicate that governments
normally invest in firms which are operating on the key areas that may impact significantly
to the country’s economy and absolutism. In this case, agency costs are higher in
government-owned firms because of conflicting objectives between the pure profit goal of a
commercial firm and those related to the interests of the nation (Eng and Mak, 2003).
Therefore, consistent with the agency theory, firms with a higher percentage of government-
held shares are likely to disclose more voluntary information as a means of reducing agency
cost. Using different measurements, Özcan (2020) reveals that government ownership is the
positive determinant of environmental, social and governance disclosure performance by
traded rail companies in an international setting. By contrast, using agency theory, Raimo
et al. (2020) find that government ownership is negatively associated with IR quality and
IRD alignment levels, which are inconsistent with their expectation. The negative
association could be because of a very minimal percentage of shares held by the state, only
2.33%, does not have enough influence on the disclosure behaviour by the sample firms.
Drawing from legitimacy theory, Mohd Ghazali (2007) proposes and proves that firms
with higher government ownership may undertake more socially responsible activities and
disclose more corporate social responsibility information to legitimise their operations. In a
most recent study, Manes-Rossi et al. (2020) show that government ownership has a positive
influence on IRD by European state-owned enterprises.
In the centrally-planned economy, Vietnam operated under a subsidized economy; and all
activities of firms were under the supervision of the government. After shifting to the
market economy model, the state has gradually withdrawn its capital from firms, enabling
individuals to own and contribute to the development of the country’s economy (see, for
MEDAR example, Corfield, 2008). Changes in the operating model of firms come with transparency in
30,6 information disclosure aimed at sustainable development for the future. Nonetheless, the
government and state-owned firms still play a significant role in leading the economy
(Sakata, 2013). Following the institutional theory, it is therefore proposed that:

H4. There is a positive relationship between the percentage of shares held by the
government and the level of IR disclosure.
1552
3.1.5 Hypothesis five – audit quality. A number of studies have investigated the relationship
between audit firm size and corporate disclosure (Ahmed and Nicholls, 1994; DeAngelo,
1981; McNally et al., 1982; Singhvi and Desai, 1971). A positive association between audit
quality and disclosure levels is presented by several previous studies (Abdelsalam and
Weetman, 2007; Gallery et al., 2008; Glaum and Street, 2003; Inchausti, 1997; Singhvi and
Desai, 1971; Street and Gray, 2002; Uyar and Kiliç, 2012). Regarding IR literature, the
positive association between external assurance and IRD is also documented (Malola and
Maroun, 2019; Manes-Rossi et al., 2020; Rivera-Arrubla et al., 2017). On the other hand, some
researchers do not figure out the influence of audit quality on corporate disclosure (Alsaeed,
2006; Wallace et al., 1994), which could be because of the limited role of auditors to the
boundaries of mandatory requirements (Alsaeed, 2006).
In Vietnam, Big-4 auditors charge a premium over other auditors, which is a common finding
in the literature (see, for example, Craswell et al., 1995). Therefore, Big-4 auditors’ clients are large
firms; and the reason they hire these auditing firms to audit is because of the audit quality but
also self-expression. Through hiring big auditing firms, Vietnamese firms try to affirm their
position and preserve the faith from their stakeholders by disclosing more voluntary information.
Following stakeholder and legitimacy theory, it is therefore proposed that:

H6. There is a positive relationship between the level of IRD and audit quality.
3.1.6 Hypothesis six – firm size. The positive association between firm size and disclosure
levels has been documented in both cross-country (Ali et al., 2004; Dong and Stettler, 2011;
Hope, 2003; Meek et al., 1995) and within-country studies (Barako et al., 2006; Botosan, 1997;
Cooke, 1992; Depoers, 2000; Dong and Stettler, 2011; Gallery et al., 2008; Palmer, 2008;
Singhvi and Desai, 1971; Wallace et al., 1994). On the other hand, some other studies do not
find the relationship between firm size and corporate disclosure levels (Taplin et al., 2002).
Such unsupported findings may originate from a small sample size (Taplin et al., 2002;
Tower et al., 1999) or a sample homogeneity (Glaum and Street, 2003).
Even though the firm size is one of the common determinants examined in disclosure
research, prior IR research provides inconsistent findings on the impact of this factor. Whilst
recent research documents the positive influence of firm size on IRD levels (Altarawneh and
Al-Halalmeh, 2020; Marrone and Oliva, 2020; Raimo et al., 2020; Vitolla et al., 2020), other
earlier studies fail to prove the association (Kılıç and Kuzey, 2018a).
In the Vietnam context, large firms have been attempted to adopt the abroad reporting
framework to get closer to foreign investors and response to their demand for enhancing
disclosure levels. Following agency theory, it is therefore proposed that:

H6. There is a positive relationship between firm size and the level of IRD.

3.2 Sample selection and characteristics and data sources

The sample consists of the top 200 Vietnamese listed firms by market capitalisation as of 31
December 2017. Because there are no differences in regulation on financial reporting
disclosure by listed firms imposed by HNX and HOSE, sample firms may list on either HNX Integrated
or HOSE (referred as to Vietnamese stock exchanges). This study includes the financial reporting
industry sector as there are no identified additional requirements for disclosure by financial
firms according to the IIRC Framework. In the case of the firm initially included in the
sample but its annual report for 2017 is not available on the stock exchanges, the next high-
market capitalisation firm is selected alternatively. Therefore, the study sample comprises
of the top 200 Vietnamese listed firms having 2017 annual reports available on the securities 1553
exchanges’ online archives.
The selected sample is relatively small due to the labour-intensive data collection process
that has been suggested as a disadvantage of the manual coding approach in the literature
(Beattie and Thomson, 2007; de Villiers et al., 2017). The limitation of the small sample size is
consistent with recent IR studies such as Kılıç and Kuzey (2018b) and Rivera-Arrubla et al.
(2017) using a researcher-constructed disclosure index.
Our sample accounts for 28% of the total Vietnamese listed firms as at 31 December 2017
and may decrease the validity of the generalisation of the study. However, these firms
include all large-cap and mid-cap firms and represent more than 90% of the market
capitalisation of Vietnamese stock exchanges in 2017. Thus, even though the sample is
relatively small, it covers most of the Vietnamese stock exchanges and could be
representative of annual reporting practices in Vietnam.
Vietnamese listed firms are required to include some social and environmental
information in annual reports. Besides, there are only 14 firms in the sample issuing
separate sustainability reports, whereas those firms still disclose social and environmental
disclosure in the annual reports. As such, the study uses sample firms’ annual reports to
examine the IRD alignment levels and associated factors. The study analyses annual reports
downloaded from the stock exchanges’ online archives.

3.3 Research model and variable measurement

3.3.1 Research model. The six hypotheses are jointly tested using the 2017 financial year
data to estimate the ordinary least squares (OLS) regression as specified in the following
equation:

IRDi ¼ b 0 þ b 1 IND þ b 2 BIND þ b 3 FO þ b 4 GO þ b 5 BIG þ b 6FS þ « (1)

3.3.2 Dependent variable. One of the most commonly used forms of content analysis method
is confirming the existence or absence of each item with a non-weighted disclosure approach
(Krippendorff, 2004). This study follows that common approach and measures the IRD score
by a firm using the content analysis method based on 50 disclosure items that are in the IIRC
Framework (Table 2).
This approach has also been used in many prior IR related disclosure studies (see, for
example, Ahmed Haji and Hossain, 2016; García-S
anchez et al., 2013; Kılıç and Kuzey, 2018a;
Oliveira et al., 2010). Each disclosure item is given a score of one (1) if the required disclosure
has been made and zero (0) if it has not. Hence, a firm received a score ranging from 0 to 50,
depending upon the actual number of items disclosed in its annual report.
The IRD is calculated by dividing the items disclosed to a maximum number of items
that a firm could disclose as follows.
MEDAR Content elements (Group) Disclosure items
30,6
Organizational overview and external environment Mission and vision statement
(G1: 13 items) General explanations about organization culture, ethics or values
Code of conduct
Ownership or operating structure
Competitive landscape and market positioning
The number of employees
1554 Countries in which the organization operates
Legal factors
Political factors
Social factors
Market forces
Key stakeholders
Environmental factors
Governance (G2: 5 items) Board of directors list
Board experience or skills
Culture, ethics and values are reflected in its use of and effects on
the capitals
Actions are taken to monitor the strategic direction
Compensation policies
Business model (G3: 15 items) Key inputs
Product differentiation
Delivery channels and marketing
After-sale service
Innovation
Employee training
Key products and services
GHG emissions
Water waste
Employee morale
Organizational reputation
Revenue, cash flows
Customer satisfaction
Increase in capitals (create value)
Decrease in capitals (diminish value)
Risks and opportunities (G4: 2 items) Internal or external risks
Internal or external opportunities
Strategy and resource allocation (G5: 6 items) Short-, medium- and long-term strategic objectives (without time
frame)
Short-, medium- and long-term strategic objectives (with time
frames)
Strategies it has in place or intends to implement, to achieve those
strategic objectives
The measurement of achievements and target outcomes
An understanding of the organization’s ability to adapt to change to
achieve goals
The link between strategies and key capitals
Performance (G6: 5 items) KPI that present financial measures
KPIs that combine financial measures with other components
(i.e. the ratio of greenhouse gas emissions to sales)
The linkages between past and current performance
The comparison between regional/industry benchmarks
Financial implications of significant effects on other capitals
Outlook (G7: 4 items) Expectations about future or explanations about uncertainties
Forecast about KPIs
Assumptions related to those forecasts
The linkages between current performance and the organization’s
outlook
Table 2.
Notes: This table provides the list of disclosure items, which are the seven content elements of the IIRC <IR> framework
The level of IRD (IIRC, 2013), used in determining the IRD score. A score of “1” is given if the disclosure item has been made and “0” if it has
alignment checklist not. The disclosure checklist is consistent with the one used by Kılıç and Kuzey (2018a); GHG - Greenhouse gas
 P
t
Integrated
IRj
j¼1 reporting
IRDi ¼ (2)
t

where:
IRDi = the score of IRD by the firm i;
IRi = “1” if item j was disclosed in the annual report and “0” otherwise; and 1555
t = 50, which is the maximum number of IRD items that a firm could disclose
alignment with the IIRC Framework.
As noted in the extant literature, the development and application of the researcher-
constructed index to assess disclosure may have effects on the reliability and validity of the
disclosure score (Artiach and Clarkson, 2011; Beyer et al., 2010). Following commonly
established practices from prior research, this study takes several steps to improve the
reliability and validity of the IRD alignment checklist.
Firstly, the disclosure items are carefully selected from the IIRC <IR> framework to
ensure the presence of information in accordance with the IIRC Guiding Principles (IIRC,
2013). The checklist is also compared with the prior studies, Kılıç and Kuzey (2018a), to
increase the validity of the study’s findings.
Secondly, the pilot test on the applicability of the IRD alignment checklist to annual
reports is performed after a thorough review of all disclosure items and scoring scheme. The
pilot test was applied to score the IRD alignment levels in 10 annual reports (Each of the five
researchers codes two annual reports). The process enables calibration of the checklist and
scoring scheme before scoring the remaining 190 annual reports.
Thirdly, each of the five researchers was assigned and scored 38 annual reports that
make 40 annual reports coded by each research. All the researchers use the same
spreadsheet template for scoring and recording the page number and section relevant to
each disclosure item. After all the research completing the coding process, the other
researcher re-coding the annual reports with the top 10% highest and lowest IRD alignment
levels. The re-assessing scores for 40 annual reports are consistent with the initial scores
coded by the first five researchers.
3.3.3 Independent variable. Table 3 summarizes the list of independent variables used in
this study and how to measure those variables.

4. Results and implications

4.1 Integrated reporting disclosure alignment levels in annual reports
To answer the first research question on the level of IRD of Vietnamese listed firms, we
perform statistics and present in Table 4. The descriptive statistics show a substantial
variance of IRD by firms listed in Vietnam, ranging from 0.16 to 0.80, with a mean of 0.43

Independent variable Measurement

Type of industry (IND) “1” if a firm operates in the manufacturing industry and “0” otherwise
Board independence (BIND) % of non-executive directors to total directors
Foreign ownership (FO) % of shares held by foreign investors Table 3.
Government ownership (GO) % of shares held by the government Independent
Big Four (BIG) “1” if a firm is audited by one of the Big-4 audit firms and “0” otherwise variables and
Firm size (FS) The natural logarithm of total assets measurement
MEDAR (Panel A of Table 4). The average disclosure score indicates that Vietnamese listed firms
30,6 only disclose about 22 items as required by the IIRC <IR> framework.
Comparing the IRD alignment level of Vietnamese firms to those in other countries is
difficult due to different requirements for and practices of IR and measures of IRD levels.
Nonetheless, there are comparative studies of firms in emerging economies. One of the most
relevant example is Kılıç and Kuzey (2018a) study of IRD in annual reports and stand-alone
1556 sustainability reports in Turkey because of the similarity in the measurement of IRD and
neither legal requirements for producing IR in Vietnam nor Turkey.
The IRD alignment level in annual reports of Vietnamese listed firms is slightly lower
than that of IRD scores of Turkish non-financial listed firms, ranging from 0.18 to 0.96 with
a mean of 0.63 (Kılıç and Kuzey, 2018a). The increasing focus on sustainability reporting
and IR from listed firms and regulators in Turkey, as highlighted by Kılıç and Kuzey
(2018a), could result in the higher integrated disclosure firms listed in Bursa Istanbul.
The IRD level in Vietnam is moderate compared to the disclosure score (of about 70.2%
on average) in integrated reports of 82 international firms from 25 countries for the period
five year from 2011 to 2015 (Pavlopoulos et al., 2019). However, with a mean disclosure of
43%, the findings of the current research suggest that IRD levels in Vietnam are relatively
comparable to those in Jordan (of about 51.28%) documented in an early view study by Al
Amosh and Mansor (2021).
The study further conducts a detailed analysis of each group of information based on the
IR framework to provide insight into the level of IRD of the sample firms (see Panel B of
Table 4).
Panel B of Table 4 shows that the IRD alignment levels by content elements of the IIRC
framework vary significantly, ranging from 0.15 (for G7 “Outlook”) to 0.69 (for G2
“Governance”). Our findings are relatively consistent with Kılıç and Kuzey (2018a)’s
research that document the three most disclosed groups are for G1 “Organizational overview
and external environment”, G2 “Governance” and G4 “Risks and opportunities”.
The descriptive analysis shows a wide variation of IRD alignment amongst the seven
groups. As indicated by the standard deviation, the disclosure of G4 (referring to “Risks and
opportunities”) shows the widest variation (0.26); whereas the disclosure of G2 (referring to
“Governance”) exhibits the smallest variation (0.15). Table 5 below presents the details of
IRD alignment with the IR framework by index items.
4.1.1 Disclosure of organizational overview and external environment (G1). The
disclosure of the 13 items in this category assists stakeholders in understanding what
the firm does and what circumstances it operates. Most listed firms in Vietnam disclose

IRD score N Min Max Mean SD

Panel A: The overall IRD score

IRD score 200 0.16 0.80 0.43 0.13
Panel B: The breakdown of IRD by group of disclosure items
G1 200 0.08 1.00 0.55 0.19
G2 200 0.20 1.00 0.69 0.15
Table 4.
G3 200 0.07 0.80 0.36 0.17
IRD alignment level G4 200 0.00 1.00 0.58 0.26
of listed firms in G5 200 0.00 0.83 0.35 0.19
Vietnam by content G6 200 0.00 0.80 0.30 0.16
elements G7 200 0.00 0.75 0.15 0.17
 Firms disclose
Integrated
Disclosure item No. % reporting
Organizational overview and external environment (G1) 55
Mission and vision statement 106 53.0
General explanations about organization culture, ethics or values 93 46.5
Code of conduct 37 18.5
Ownership or operating structure 167 83.5
Competitive landscape and market positioning 92 46.0 1557
The number of employees 191 95.5
Countries in which the organization operates 102 51.0
Legal factors 91 45.5
Political factors 17 8.5
Social factors 170 85.0
Market forces 68 34.0
Key stakeholders 112 56.0
Environmental factors 170 85.0
Governance (G2) 69
Board of directors list 199 99.5
Board experience or skills 181 90.5
Culture, ethics and values are reflected in its use of and effects on the capitals 7 3.5
Actions taken to monitor strategic direction 170 85.0
Compensation policies 135 67.5
Business model (G3) 36
Key inputs 33 16.5
Product differentiation 16 8.0
Delivery channels and marketing 55 27.5
After sale service 9 4.5
Innovation 129 64.5
Employee training 155 77.5
Key products and services 175 88.5
GHG emissions 40 20.0
Water waste 72 36.0
Employee morale 24 12.0
Organizational reputation 72 36.0
Revenue, cash flows 160 80.0
Customer satisfaction 47 23.5
Increase in capitals (create value) 93 46.5
Decrease in capitals (diminish value) 3 1.5
Risks and opportunities (G4) 58
Internal or external risks 187 93.5
Internal or external opportunities 46 23.0
Strategy and resource allocation (G5) 34.6
Short-, medium- and long-term strategic objectives (without time frame) 117 58.5
Short-, medium- and long-term strategic objectives (with time frames) 106 53.0
Strategies it has in place or intends to implement, to achieve those strategic objectives 110 55.0
The measurement of achievements and target outcomes 19 9.5
An understanding of the organization’s ability to adapt to change to achieve goals 56 28.0
The link between strategies and key capitals 7 3.5
Performance (G6) 12
KPIs that present financial measures 140 70.0
KPIs that combine financial measures with other components (i.e. the ratio of greenhouse 2 1.0
gas emissions to sales)
The linkages between past and current performance 126 63.0
The comparison between regional/industry benchmarks 29 14.5
Financial implications of significant effects on other capitals 2 1.0 Table 5.
Outlook (G7) 14.5 IRD alignment of
Expectations about future or explanations about uncertainties 70 35.0
listed firms in
Forecast about KPIs 28 14.0
Assumptions related to those forecasts 3 1.5 Vietnam by index
The linkages between current performance and the organization’s outlook 15 7.5 items
MEDAR “the number of employees” (191 firms, equivalent to 95.5%), whereas only a few firms
30,6 provide information on “the political factors” (17 firms, equivalent to 8.5%). However, as
presented in Panel B of Table 4, there are few firms fully disclosing items for organizational
overview and external environment.
4.1.2 Disclosure of governance (G2). The disclosure of the five items in this category
assists stakeholders in understanding how the firm’s governance structure supports it
1558 creating value. This group consists of five disclosure items. Almost all firms disclose a
“board of directors list” (199 firms, equivalent to 99.5%), whilst it is surprising that only 7 of
the 200 firms (3.5%) provide information on “culture, ethics and values are reflected in its
use of and effects on the capitals” in the annual reports. However, as presented in Panel B of
Table 4, only a few firms disclose all items for governance.
4.1.3 Disclosure of business model (G3). The disclosure of the 15 disclosure items in this
category assists stakeholders in understanding the firm’s business model. There is a
substantial variation in the disclosure extent within this group. Whilst there are 175 firms
(87.5%) disclosing “key products and services”, only three firms (1.5%) provide information
on “Decrease in capitals (diminish value)”. Surprisingly, no firms disclose all items for
business models (see Panel B of Table 4).
4.1.4 Disclosure of risks and opportunities (G4). The disclosure of the two items in this
category enables stakeholders to comprehend the specific risks and opportunities affecting
the firm’s ability to create value and what actions that the firm takes. This group consists of
two disclosure items. Table 5 clearly shows that most of the firms prefer reporting risks to
reporting opportunities. The reason could be that Vietnamese firms conservatively provide
risk factors so that the users can take them into consideration when making related
decisions. In contrast, they may withhold information on opportunities that could attract
more competitors or have negative influences on the firms’ competitive advantages.
4.1.5 Disclosure of strategy and resource allocation (G5). The disclosure of the six items
in this category assists stakeholders in understanding where the firm wants to go and how it
intends to get there. The information that most firms disclosed is “Short-, medium- and long-
term strategic objectives (without time frame)”. Whilst only a few firms give disclose “The
link between strategies and key capitals” (199 firms, equivalent to 99.5% as compared to 7
firms, equivalent to 3.5%). As the information on business models (G3), there are no firms
fully disclosing all items for strategy and resource allocation (see Panel B of Table 4).
4.1.6 Disclosure of performance (G6). The disclosure of the five items in this category
enables the evaluation of the firm’s achievement and outcome. This group consists of five
disclosure items. The information that most firms disclose is “key performance indicators
(KPI)s that present financial measures” (140 firms, equivalent to 70.0%). Whilst only two
firms (1.0%) disclose “KPIs that combine financial measures with other components” or
“Financial implications of the significant effects on other capitals”. There are also no firms
fully disclosing all items for strategy and resource allocation (see Panel B of Table 4).
4.1.7 Disclosure of outlook (G7). The disclosure of the four items in this category allows
users to assess challenges and uncertainties and the implications for business models and
future performance. On average, the disclosure level for this group is the lowest amongst the
seven ones. The item that most firms disclosed is “Expectations about future or
explanations about uncertainties” (70 firms, equivalent to 35.0%), whereas only three firms
(1.5%) provide information on “Assumptions related to those forecasts”. There are also no
firms fully disclosing all items for strategy and resource allocation (see Panel B of Table 4).
The findings on the most disclosure items related to each category of the IIRC <IR>
Framework’s content elements are consistent with Kılıç and Kuzey (2018a). However, except
for the disclosure of “Short-, medium- and long-term strategic objectives (without time
frame)”, the percentage of Vietnamese listed firms that includes the most disclosed elements Integrated
is a little lower than that of Kılıç and Kuzey (2018a). Similarly, the findings on the least reporting
disclosed items related to each content elements are also generally consistent with Kılıç and
Kuzey (2018a).

4.2 Factors predicted to influence integrated reporting disclosure alignment levels

The second research question examines factors associated with levels of IRD alignment with 1559
the IIRC framework of firms listed in Vietnam. This section provides the results of the
regression model performed to test the predictions of the six hypotheses.
4.2.1 Univariate statistical analysis. Table 6 presents the correlations matrix of the
independent variables to identify any issues of multicollinearity. There are no correlation
coefficients greater than 0.322. Therefore, for OLS regression, the independent variables
included in equation (1) show less threat of multicollinearity (Gujarati and Porter, 2008; Hair
et al., 2019).
4.2.2 Multivariate statistical analysis. Table 7 presents the regression results for
estimating the IRD level of listed firms in Vietnam. The results indicate that the model is
statistically significant in explaining IRD levels of Vietnamese listed firms (F = 7.737, p <
0.001). The adjusted R2 shows that the six independent variables explain 16.9% of the
variations in IRD.
The results (not tabulated) also reveal that there is no multicollinearity in this model
because the maximum coefficient of variance is 1.197, which is lower than the allowed
threshold of 10 (Gujarati and Porter, 2008; Hair et al., 2019).

Variables IRD IND BIND FO GO BIG FS

IRD 1
IND 0.182** 1
BIND 0.143* 0.155* 1
FO 0.225** 0.027 0.088 1
GO 0.152* 0.022 0.179* 0.001 1 Table 6.
BIG 0.266** 0.073 0.067 0.145* 0.083 1
Correlation between
FS 0.216** 0.187** 0.091 0.118 0.116 0.322** 1
dependent variable
Notes: ** Correlation is significant at the 0.01 level (two-tailed). * Correlation is significant at the 0.05 level and independent
(two-tailed) variables

IRDi = b 0 þ b 1IND þ b 2BIND þ b 3FO þ b 4GO þ b 5BIG þ b 6FS þ «

Variables Hypothesis Expected sign Coefficients t-stat p-value

IND H1 ? 0.049 2.870 0.005

BIND H2 þ 0.058 1.947 0.053
FO H3 þ 0.001 2.685 0.008
GO H4 þ 0.001 2.226 0.027
BIG H5 þ 0.037 2.119 0.035 Table 7.
FS H6 þ 0.014 2.521 0.013 Results of the
Adj. R2 0.169 multivariate
F-stat 7.737 <0.001 regression model
MEDAR Consistent with the prediction of the first hypothesis (H1), the IND variable coefficient is
30,6 positive and statistically significant ( b 1 = 0.049, p < 0.01), demonstrating a positive impact
of the manufacturing industry on the preparation, presentation and publication of
information alignment with the IIRC Framework. The effect could be because
manufacturing firms generally have more impact on the environment and may engage in
more socially responsible activities; therefore, investors are likely to desire to be provided
1560 more related information to make a better decision. The result is also consistent with the
empirical evidence of previous disclosure research (Buitendag et al., 2017; David and
Markus, 1996; Stanga, 1976).
The second hypothesis (H2) predicts that the levels of IRD are higher for firms with a
higher proportion of independent directors. Consistent with the prediction, the BIND
variable coefficient is also positive and statistically significant ( b 2 = 0.058, p < 0.1). This
finding is similar to many prior studies on disclosure (Chen and Jaggi, 2000; Forker, 1992;
Haniffa and Cooke, 2002; Nguyen and Duong, 2019; Nguyen and Vo, 2018; Özcan, 2020;
Pavlopoulos et al., 2017; Vitolla et al., 2020).
Consistent with the prediction of the third hypothesis (H3), the FO variable coefficient is
positive and statistically significant ( b 3 = 0.001, p < 0.01). This result demonstrates that the
IRD is higher for firms that foreign ownership accounts for a large proportion. This
association might be because regulations on information disclosure in most foreign
countries with the developed capital markets are becoming more and more strict. Hence,
better disclosure by firms with foreign investors could allow the firms to meet the
stakeholders’ expectations better. This finding is consistent with prior disclosure studies
(Barako et al., 2006; Haniffa and Cooke, 2002; KPMG, 2017).
Consistent with the prediction of the fourth hypothesis (H4), the GO variable coefficient is
positive and statistically significant ( b 3 = 0.001, p < 0.01), which is like the case of the third
hypothesis. This finding confirms the positive influence of government ownership on IR
disclosure, which is consistent with prior disclosure studies (Eng and Mak, 2003; Manes-
Rossi et al., 2020; Özcan, 2020).
The fifth hypothesis (H5) projects a positive association between audit quality
(proxied by Big-4 auditors) and IRD levels. Consistent with the projection, the BIG
variable coefficient is positive and statistically significant ( b 5 = 0.037, p < 0.05). The
study determines that auditing by big international auditing firms enhances the IRD. The
finding is consistent with prior disclosure studies including recent ones in Vietnam
(Abdelsalam and Weetman, 2007; Gallery et al., 2008; Glaum and Street, 2003; Inchausti,
1997; Malola and Maroun, 2019; Manes-Rossi et al., 2020; Nguyen and Duong, 2019;
Rivera-Arrubla et al., 2017; Singhvi and Desai, 1971; Street and Gray, 2002; Uyar and
Kiliç, 2012). Big-4 auditors do not directly audit for all items provided in the listed firms’
annual reports, but rather the financial statements. Although it is entirely management’s
responsibility to prepare annual accounts, auditing firms could have an indirect influence
on the reporting entities’ disclosure extent in annual reports thanks to certain input from
the auditors, such as non-auditing services.
The FS variable coefficient is also positive and statistically significant ( b 6 = 0.014,
p < 0.05) supporting the H6 hypothesis. This result suggests that the IRD is higher for
larger firms. This finding is consistent with empirical evidence from a large number of
disclosure studies (Altarawneh and Al-Halalmeh, 2020; Botosan, 1997; Cooke, 1992;
Depoers, 2000; Dong and Stettler, 2011; Gallery et al., 2008; Marrone and Oliva, 2020;
Palmer, 2008; Raimo et al., 2020; Singhvi and Desai, 1971; Vitolla et al., 2020; Wallace
et al., 1994).
4.3 Implications Integrated
The results of this study have several implications for regulatory authorities, public and reporting
private sector organizations, academics and researchers. Our findings are of significance for
regulators as it implies possible actions that could promote IR adoption in Vietnam.
This research reveals that listed firms in Vietnam disclosed nearly half of the required
items as guided by the IIRC Framework. The IRD alignment level in annual reports is not
high as expected compared to other countries such as Turkey as found in Kılıç and Kuzey
(2018a). However, given that IR is still new and not mandated in the country; and there has 1561
been no official guidance on how to apply the framework, adopting the IIRC <IR>
Framework could be a promising disclosure tool in Vietnam if policymakers take further
steps to promote the implementation of IR.
The findings that the IRD alignment level in annual reports by certain items highlighting
the relative completeness, whereas the other disclosure items reveal the deficiencies could be
useful for regulators and reporting entities to encompass IR policies and practices. The
greater disclosure on categories of organizational overview (G1) and governance (G2) is
consistent with findings in Kılıç and Kuzey (2018a). The national current disclosure
requirements for annual reports could impact this better disclosure.
In contrast, the deficiencies in disclosure of certain quantitative items could be a concern
of policymakers such as the decrease in capitals, KPIs combining financial measures with
other components and financial implications of significant effects on other capitals. The
unwillingness to disclose forward-looking and qualitative information is also highlighted in
Kılıç and Kuzey (2018b). To promote the disclosure on these items, the regulators should
provide further specific guidelines on measurement and reporting issues that would help
firms to implement.
The disclosure level adhering to the IIRC Framework by listed firms is optimistic for the
regulatory authorities in Vietnam consider to promote listed firms and other large firms to
prepare and disclose IR. To promote the disclosure transparency for the capital market, the
government may consider to gradually incorporating appropriate items in alignment with
the IIRC Framework into mandatory annual reports. And then, when firms are familiar with
disclosing such information, the adoption of IR should be required or encouraged by early
adopters, such as large manufacturing firms. Although regulation is needed to promote the
adoption of IR, the IR adoption process should be dynamic enough to allow the firms to
implement and consolidate integrated thinking, practising and reporting, as suggested by
prior research (Camilleri, 2018; Dumay et al., 2017).
The low levels of IRD in alignment with the IIRC Framework by listed firms in Vietnam
could be understandable. Some listed firms in Vietnam have gradually become aware of the
importance of sustainable development. In addition to paying attention to the benefits, they
also focus on the environmental impacts on improving their activities’ quality. Some other
firms, in addition to disclosing information in compliance with regulations, also publish
additional voluntary information to meet the needs of stakeholders. Most of these firms rely
on the Global Reporting Initiative standards for sustainable development reporting to
disclose their information. They still do not apply the standards entirely but rather adapt
selectively. On the other hand, as this is voluntary disclosure, firms tend to view this as a
tool to promote images to attract investment, especially foreign investment. Given that there
are only a few firms in Vietnam adopt the IIRC Framework, the findings influencing factors
may facilitate and encourage firms in adapting IR framework when issuing annual reports.
The findings that association of industry (IND), board independence (BIND) and audit
quality (BIG) have positive impacts on IRD alignment level suggest regulators take further
steps to promote IR in an emerging economy such as Vietnam. The voluntary adoption of IR
MEDAR should initially target the manufacturing industry, especially the worst polluters. The
30,6 requirements for the proportion of listed firms’ independent members of at least one-third of
the boards should strictly enforce to enhance IRD alignment levels and encourage the
adoption of IR[1]. Similar to financial reports, the board of directors should be required to
make responsibility statements as guided by the IIRC <IR> Framework (IIRC, 2013). As
Big-4 auditors do play an important role to enhance the IR disclosure, regulators should
1562 consider the mandatory assurance for integrated reports. Further, regulators could work
with high-quality auditing firms to facilitate the implementation of IR thanks to the
advisory services or professional training.
IR has become popular in many countries and has applied to many firms. However,
Vietnamese listed firms are still not familiar and ready to prepare and issues this kind of
report. The unawareness of the importance and value-added information of IR could be an
organizational barrier to the application of the IR framework in Vietnam. There is still a gap
between preparation of the (traditional) annual reports and adoption of IR evidenced by the
findings of a relatively low level of IRD. Therefore, academia and professional accounting
bodies should offer training of preparation and disclosure of IR.
This research is carried out in Vietnam, where there is no regulation on the
implementation of IR. Because of that, the assessment of IRD score is based on annual
reports. This approach could be appropriate to conduct similar research in the future to
explore the possibilities of adoption of IR in any country setting.

5. Conclusion
To the best of our knowledge, this is the first studies examining the disclosure practices by
firms listed in Vietnam using the IIRC <IR> Framework. In the setting where there are only
a few firms preparing an integrated report and few others officially declare the adaptation of
the IR Framework to prepare their annual reports, this study provides significant
contributions to the disclosure literature and practices.
Our study reveals that the levels of disclosure of Vietnamese listed firms in annual
reports in alignment with the IIRC Framework are slightly higher than 40% on average.
This finding suggests the possibilities and opportunities for firms and regulatory bodies to
consider the provision of IR to meet the expectation of various stakeholders better. The
findings that IRD varies significantly across the sample firms and groups of information
content may suggest that the adoption of the IR framework could be taken in different
stages – starting with the manufacturing industry, large firms and selective information
contents. Further, the findings that IRD is positively and significantly associated with the
manufacturing industry, board independence, foreign ownership, government ownership,
Big-4 auditors and firm size could enrich disclosure literature. These findings could be of
interest to research in emerging economies, especially in Vietnam, where there is still a
substantial research gap due to the barrier of language.
This study faces certain limitations specific to the nature of this type of research. Due to
limitations in the scope of the study, not all listed firms in Vietnam are examined, this study
is limited to a temporary period due to hand-collected data that is time-consuming. Besides,
the level of IRD is mainly structured and measured by the 50-point dichotomous checklists
developed by the researchers based on the IIRC’s IR Framework. Accordingly, the IRD
alignment level revealed in the study is limited to the “width” of disclosure, that is more
about disclosure compliance rather than disclosure quality.
The limitations that the study mentioned above are the guidelines for future research.
Firstly, this research only measures the applicability of 200 listed firms (accounts for
27.47%), which may be limited in representing the whole of Vietnamese listed firms. Future
research could expand the sample size. Secondly, this research is only conducted in one Integrated
country and at one period (in 2017). Thus, this selection process could affect the comparison reporting
of the disclosure alignment of Vietnamese firms and the others, as well as to generalise the
findings to more countries and different periods. Further research could be extended to a
larger sample and a longitudinal setting to observe the changes of IRD alignment levels
which may be more reliable for the consideration of adoption of IR in the country. Finally,
the study does not examine the “depth” of disclosure. Further research could address this 1563
limitation by constructing a weighted disclosure index to measure the detailed IRD
disclosure alignment levels.

Note
1. Decree 71/2017/ND-CP, applicable to the 2018 annual report, requires that at least one-third of the
members of the board of directors are non-executive members (Ministry of Finance, 2017).

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Corresponding author
Huu Cuong Nguyen can be contacted at: cuonghien@due.edu.vn

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