Integrated Reporting and Earnings Management

Posted: 2 Aug 2019

See all articles by Yuji Shirabe

Yuji Shirabe

Toyo University

Makoto Nakano

Hitotsubashi University

Date Written: July 28, 2019


This study examines whether the introduction of integrated reporting affects earnings management. According to the International Integrated Reporting Framework, published by the International Integrated Reporting Council in 2013, integrated reporting is intended not only to improve the quality of information available to external parties, but also to improve internal decision making. Introducing integrated reporting is expected to correct companies’ short-term orientation and promote long-term value creation. Using data from Japan, where a large number of companies are voluntarily practicing integrated reporting, we find that firms are more likely to report conservative earnings after the introduction of integrated reporting, in terms of both accrual-based earnings management and real earnings management. We also find that the effect of integrated reporting on earnings management appears approximately two years or more after the introduction of integrated reporting. This evidence is consistent with practitioners’ point that integrated reporting is a continuous improvement process, and so takes several years to improve internal decision making. Finally, our findings provide evidence for standard setters and regulators who are interested in the merits of integrated reporting that integrated reporting promotes decision making with a long-term focus, resulting in more conservative earnings management.

Keywords: integrated reporting, sustainability, corporate social responsibility, earnings management, long-term value creation

JEL Classification: M14, M41, G30

Suggested Citation

Shirabe, Yuji and Nakano, Makoto, Integrated Reporting and Earnings Management (July 28, 2019). Available at SSRN: or

Yuji Shirabe (Contact Author)

Toyo University ( email )

5-28-20 Hakusan
Tokyo, 1128606

Makoto Nakano

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601


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