Shiomi KONDO

Integrated reporting (IR) emerged as a new form of corporate reporting that calls for consistent disclosure of financial and non-financial information. In 2013, the International ‹IR› Framework was released with the aim of stabilizing global finance and rebuilding a sustainable economy and society. Previous corporate reporting focused on short-term decision-making by investors and other stakeholders. However, this framework calls for “communication with companies on the creation value process based on the medium- to long-term perspective through integrated reports with stakeholders” (IIRC, 2013, p.8). We focus on the “investment decision usefulness of integrated reporting” as an issue in IR research. Previous accounting studies concentrate on “value relevance” to examine the usefulness of investment decisions in financial reporting. However, research on the value relevance of integrated reports is still inadequate, and further research is needed for IR to function as a corporate report in line with financial reporting. In this study, we consider the usefulness of IR for investment decisions from sociology perspective, with the assumption that it is difficult to obtain a new suggestion. We advance the theoretical research based on sociological methods by the German sociologist N. Luhmann. First, we capture accounting from Luhmann's theoretical perspective by re-describing accounting as an accounting system, and confirm the position of IR in the accounting system. Second, we consider the problem of “investment decision usefulness of integrated reporting” from the perspective of communication in the accounting system, and investigate the problems hidden within integrated reports.

In response to the globalization of business circumstances, expansion of corporate information is an urgent issue in the international accounting area. In 2013, The International Integrated Reporting Council (IIRC) proposed an integrated reporting framework, which includes the various elements such as strategy, business model, value creation and corporate governance. In this report, stakeholder relationships is also one of the most critical information. It is advocated that the report should provide insight into the nature and quality of the organization's relationships with its key stakeholders, including how and to what extent the organization understands, takes into account and responds to their legitimate needs and interests. In this study, in order to understand the accounting issue, we attempt to propose a new view and perception from the other interdisciplinary viewpoint. We apply the Luhmann's theory of social systems to this study. In particular, we would like to discuss two aspects; first, we attempt to recognize the accounting system as one of the “systems” and describe its special quality; second, we analyze the problem on IIRC's integrated reporting from the viewpoint of stakeholder relationships.