Integrated Reporting and benefits to shareholders
Added on 2022-12-05
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Running head: INTEGRATED REPORTING
Integrated Reporting
Name of the Student
Name of the University
Author Note
Integrated Reporting
Name of the Student
Name of the University
Author Note
INTEGRATED REPORTING1
Integrated Reporting and benefits to shareholders
Shareholders are the most important part of an organisation as their funds are essential for
the survival and thriving of a firm. However, the traditional form of financial reporting provides
only specific information about the firm’s performance to them. There is no scope for the
shareholders to know the practices implemented by the firm in different aspects of the business
and its impact on them (Higgins, Stubbs & Love 2014). In case of National Australia Bank
(NAB), the commitment of the entity towards the integrated entity reporting framework is
beneficial to the shareholders. The integrated reporting framework followed by NAB provides
shareholders with information such as the external environment affecting the organisation, how it
supports communities to contribute towards sustainable development and its commitment
towards always doing the right thing. Previously, the information available to the shareholders
was limited to the amount of returns generated by their investments. The means through which
they were achieved was not always known and was considered to be unimportant. Due to the
integrated entity reporting, the firm’s implementation of good governance measures and the
usage of modern digital technology for an enhanced customer experiences are also known to the
shareholders. It also mentions about the impact of the Royal Commission on its business. While
it can be suggested that the increased disclosures may not all be understood by the shareholders,
it provides them with an assurance about the quality and integrity of the firm they have invested
in (Stubbs and Higgins 2014). The scope provided by integrated reporting towards corporate
disclosures is much wider.
Institutional theory and integrated reporting
With regards to corporate organisations, the institutional theory provides a rich and
complex view of the entities. The theory suggests that an entity has to deal with a lot of
Integrated Reporting and benefits to shareholders
Shareholders are the most important part of an organisation as their funds are essential for
the survival and thriving of a firm. However, the traditional form of financial reporting provides
only specific information about the firm’s performance to them. There is no scope for the
shareholders to know the practices implemented by the firm in different aspects of the business
and its impact on them (Higgins, Stubbs & Love 2014). In case of National Australia Bank
(NAB), the commitment of the entity towards the integrated entity reporting framework is
beneficial to the shareholders. The integrated reporting framework followed by NAB provides
shareholders with information such as the external environment affecting the organisation, how it
supports communities to contribute towards sustainable development and its commitment
towards always doing the right thing. Previously, the information available to the shareholders
was limited to the amount of returns generated by their investments. The means through which
they were achieved was not always known and was considered to be unimportant. Due to the
integrated entity reporting, the firm’s implementation of good governance measures and the
usage of modern digital technology for an enhanced customer experiences are also known to the
shareholders. It also mentions about the impact of the Royal Commission on its business. While
it can be suggested that the increased disclosures may not all be understood by the shareholders,
it provides them with an assurance about the quality and integrity of the firm they have invested
in (Stubbs and Higgins 2014). The scope provided by integrated reporting towards corporate
disclosures is much wider.
Institutional theory and integrated reporting
With regards to corporate organisations, the institutional theory provides a rich and
complex view of the entities. The theory suggests that an entity has to deal with a lot of
INTEGRATED REPORTING2
normative pressures which arise from a variety of factors like the external environment,
stakeholder expectations and the regulations of the governing body (Frias-Aceituno, Rodríguez-
Ariza and García-Sánchez 2013). It suggests that any particular activity undertaken by a firm is
not always driven by a single motive and is the result of the influence of a large number of
factors. After a certain point of time, these practices become the norms followed by the
organisations worldwide. The adoption of integrated reporting framework by NAB is the result
of the voluntary adoption of the same by organisations on a worldwide basis. To further justify
the adoption of integrated reporting by NAB, it is necessary to consider further two dimensions
of the institutional theory. They are known as isomorphism and decoupling. Isomorphism can be
defined as a constraining process that restricts the firm to such an extent that it begins to
resemble other firms operating in the industry. It has been stated that adopting integrated
reporting in the Australian Banking sector has been voluntary. Even though it is evident that
there was no compulsion for NAB to adopt integrated reporting, it had reached a point where this
form of reporting became the norm (de Villiers et al. 2014). Hence, in order to prove that it cared
about the customers and other stakeholders and to also suggest that it contributes towards
sustainable development, adopting an integrated reporting framework became necessary for the
entity. Hence, the six capital approach of the firm became the method for providing stakeholders
with necessary information. Decoupling is another dimension which suggests that organisations
consider it necessary to maintain a gap between the formal policies suggested by them and the
actual policies followed by the organisation. One of the reasons for NAB to adopt integrated
reporting is to obtain legitimacy with its external stakeholders while also remaining flexible
enough to meet its organisational objectives. It can be said that adopting integrated reporting
ensures the organisation is able to attract new investors and retain them for a long time, it does
normative pressures which arise from a variety of factors like the external environment,
stakeholder expectations and the regulations of the governing body (Frias-Aceituno, Rodríguez-
Ariza and García-Sánchez 2013). It suggests that any particular activity undertaken by a firm is
not always driven by a single motive and is the result of the influence of a large number of
factors. After a certain point of time, these practices become the norms followed by the
organisations worldwide. The adoption of integrated reporting framework by NAB is the result
of the voluntary adoption of the same by organisations on a worldwide basis. To further justify
the adoption of integrated reporting by NAB, it is necessary to consider further two dimensions
of the institutional theory. They are known as isomorphism and decoupling. Isomorphism can be
defined as a constraining process that restricts the firm to such an extent that it begins to
resemble other firms operating in the industry. It has been stated that adopting integrated
reporting in the Australian Banking sector has been voluntary. Even though it is evident that
there was no compulsion for NAB to adopt integrated reporting, it had reached a point where this
form of reporting became the norm (de Villiers et al. 2014). Hence, in order to prove that it cared
about the customers and other stakeholders and to also suggest that it contributes towards
sustainable development, adopting an integrated reporting framework became necessary for the
entity. Hence, the six capital approach of the firm became the method for providing stakeholders
with necessary information. Decoupling is another dimension which suggests that organisations
consider it necessary to maintain a gap between the formal policies suggested by them and the
actual policies followed by the organisation. One of the reasons for NAB to adopt integrated
reporting is to obtain legitimacy with its external stakeholders while also remaining flexible
enough to meet its organisational objectives. It can be said that adopting integrated reporting
ensures the organisation is able to attract new investors and retain them for a long time, it does
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