
There is an ongoing debate about whether integrated reporting should be mandatory or voluntary. Empirical evidence mostly focused on South African mandatory disclosures, indicate that the firm’s information environment is relevant to explain the effects on the cost of capital. However, results based on voluntary disclosures indicate that the country’s level of enforcement explains the effects. This paper analyses the effects of voluntary disclosures of integrated reports on the cost of capital for Brazilian listed companies. Our design is developed to control the level of enforcement and evaluate if firm‐specific characteristics may explain the effects on information asymmetry related to the disclosure of integrated financial and non‐financial informaƟon. We collect data from 2014 to 2017 and compare the effects on capital cost for a group of firms that voluntarily disclose integrated reports with a control group identified via Propensity Score Matching. We can identify that larger firms, with stronger corporate governance and lower risk, are more likely to voluntarily disclose integrated reports. In our second stage, we find no effect on the cost of capital after the voluntary disclosure. Taken together, our results are aligned with prior studies focused on mandatory disclosures: the firm’s information environment is relevant to explain the potential capital market benefits of Integrated Reporting.
Voluntary Disclosure, Cost of Capital, Integrated Reporting, Propensity Score Matching
Voluntary Disclosure, Cost of Capital, Integrated Reporting, Propensity Score Matching
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