THE IMPACT OF CORPORATE GOVERNANCE CHARACTERISTICS OF THE FORWARD-LOOKING DISCLOSURES IN INTEGRATED REPORTS OF BANK, FINANCE AND INSURANCE SECTOR COMPANIES IN SRI LANKA

Abstract

This paper examines the extent of forward looking disclosures (FLD) in integrated reporting (IR) and the impact of corporate governance characteristics on the extent of FLD. This study relates to the Bank, Finance and Insurance (BFI) Sector in Sri Lanka over three consecutive years from 2015 to 2017. This sector has the highest number of companies that have prepared integrated reports among the companies listed on the Colombo Stock Exchange (CSE). The study used structured content analysis based on a disclosure index developed on the International Integrated Reporting Framework (IIRF) to investigate FLDs provided by these companies in integrated reports. The study finds that these companies provide less FLDs in relation to the content elements of IIRF. However, these disclosures have shown an increasing trend over time. This study further show that corporate governance characteristics -board size, board expertise, independence of audit committee, and audit committee meetings- have positively impacted on the extent of FLDs in these companies and board independence is negatively associated with FLDs. At present, there is a dearth of research on FLD practices in IRs in general and particularly in the developing countries. Hence, this research study contributes to the current literature on FLDs in IR in a developing country context. The findings of the study also provides insights for policy makers and practitioners with regard to FLD practices in companies that prepare integrated reports and the need to establish specific guidelines in this respect.