Effect of CEO ownership power and integrated reporting among listed firms in East Africa

Abstract

Purpose – The pressure on businesses to disclose information that goes beyond the financial aspects and includes non-financial information has grown as social, environmental, and accountability issues are receiving more attention. Integrated reporting (IR) is a technique that can close the information gap by focusing on both financial and non-financial aspects, on the linkages that already exist between the various business processes, and on the capacity of the firm to generate value over the short, medium, and long term. However, studies on the determinants of IR are limited, inconclusive, contradictory and mainly studied in developed economies. This study aimed at examining the effect of CEO ownership power on IR from a developing region perspective (East Africa). Design/methodology/approach – The study adopted explanatory and longitudinal research design with panel data to establish the causal relationship between CEO ownership power and IR. The empirical study was based on a sample of 702 firm-year observations among listed firms in East Africa for the period 2013 to 2021. Findings – The findings indicate a positively significant relationship between CEO ownership power and IR among firms listed in the East African securities exchange. Practical limitation/implications – The study used one dimension of CEO power (ownership), other studies could incorporate other dimensions of CEO power (structural, expert & prestige) and in other different contexts. From a managerial practical perspective, it shows that CEOs owning shares in the company influences the level of IR. The insights also provide useful information to shareholders and regulators in evaluating the CEO ownership power that affects IR in East Africa. This study also implies that policymakers can encourage shareholding by CEO to enhance IR. Originality/value – literature review shows a few studies have investigated the relationship between CEO ownership power and IR in the developing world specifically the East African context. This study provides empirical evidence on the impact of CEO ownership power on IR and how ownership of shares by the CEO in a firm influences the disclosure of financial and non-financial information.