Developing forward-looking orientation in integrated reporting

Abstract

Purpose According to the “strategic focus and future orientation” principle of the integrated reporting (<IR>) framework, <IR> should provide information useful to support investors in assessing the future financial performance of organizations. This study aims to support the operationalization of this function by improving the forward-looking orientation of the integrated report. Design/methodology/approach Basing on the backward- and forward-looking disclosure in <IR> and the dynamic resource-based view (DRBV), this study develops an explorative case study building a quantitative simulation model based on an integrated report. Findings This study provides useful insights into how operationalizing the <IR> “future orientation” and obtaining more quantitative information on the organization’s capacity to create value in the future by applying DRBV and quantitative simulation modeling. Research limitations/implications The article presents one case study to explore the method suggested to improve the <IR> forward-looking orientation. Additional case studies applying the same research design should be certainly useful to refine the method. Practical implications Supporting the <IR> forward-looking orientation, this study provides additional information for the decision-making process of investors, thus contributing to the efficient and productive allocation of capital. Originality/value Few studies have investigated forward-looking information in integrated reports, highlighting the existence of an “information gap” referred to such disclosure. Overcoming these previous results, the study provides useful insights on how to improve the <IR> forward-looking orientation.