INTEGRATED REPORTING:

AN EMPIRICAL ANALYSIS
A dissertation submitted to the University of Delhi
in partial fulfillment of the requirements
for the degree of
MASTER OF PHILOSOPHY
IN
COMMERCE
M.Phil Batch XXXIV
Accounting Area
BY
Pooja Dhingra

Under the supervision of

Dr. Ajay Kr. Singh

DEPARTMENT OF COMMERCE
UNIVERSITY OF DELHI DELHI
110007
INDIA
2014

DEPARTMENT OF COMMERCE
DELHI SCHOOL OF ECONOMICS
UNIVERSITY OF DELHI
DELHI-110007

DECLARATION
I

hereby

declare

that

the

dissertation

titled

Investment

development

theory:Testing the applicability in the Indian context , is an original research

work done by me and any part or whole of the dissertation is not submitted to any
University or authority for award of any degree or diploma. The dissertation
submitted in partial fulfillment of the requirements for the award of degree of
M.Phil., is an original piece of work and the indebtedness to all other sources has
been duly acknowledged.

Arushi Malhotra
(Candidate)

Dr. Niti Bhasin

( Supervisor)

Professor J.P. Sharma

Head, Department of Commerce
Faculty of Commerce & Business
Delhi School of Economics
University of Delhi
Delhi-110007

ii

ACKNOWLEDGEMENT

Firstly, I would like to thank my

Mentor Dr. Niti Bhasin for
being

such

wonderful

supervisor, I feel deeply blessed

to have a guide like her, who
encouraged me a lot to do better
in my research endeavor. She,
despite

her

several

pre-

occupation, was always ready to

give her valuable suggestions.
I would also like to thank Prof.
J.P. Sharma, Head, Department
of

Commerce,

Commerce

Faculty

and

of

Business,

University of Delhi, for having

given me this opportunity and
making resources available, for
carrying out my research work
in efficient manner. My sincere
thanks also go to Dr. Suresh
Aggarwal,

Professor,

Department

of

Business

Economics,

South

Campus,

Delhi,

for teaching in

the

coursework. I would like to

express

my

Prof.K.V.

gratitude

Bhanu

to

Murthy,

Prof.A.K. singh, Prof. Kavita

Sharma,
Commerce,
Commerce

Department

of

Faculty

of

and

Business,

University of Delhi, for their

able guidance and advice.

I owe special gratitude to Dr. JK
Thukral for his guidance and
constant encouragement for the
present work.
Special thanks to Dr. Ashok
Sehgal, Principal, Shri Ram
College
University

of
of

Commerce,
Delhi,

for

providing me the resources and

the required support to carry out
my research work smoothly.

I am also thankful to the librarian, Ratan Tata Library and Shri Ram College of
Commerce for co-operating in procuring the necessary research materials.
I am grateful to my parents for their consistent support .last but not the least thanks to
the almighty God for helping me in moment of struggle.

Arushi
Malhotra

iv

TABLE OF CONTENTS
List of Tables
List of Figures and Graphs
List of Abbreviations
CHAPTER-1: INTRODUCTION
1.1

Introduction

1.2

Scope of the Work

1.3

Relevance of Study

1.4

Research Problem

1.5

Research questions

1.6

Research Objectives

1.7

Hypotheses of the study

1.8

Research methodology

1.9

Assumptions and delimitation

1.10 Limitations of the study

1.11 Chapter overview
Chapter Scheme

CHAPTER-2: CONCEPTUAL FRAMEWORK

2.1

Integrated Reporting: A Journey

2.2

Financial Reporting

2.3

Evolution beyond financial reporting

2.4 The concept of sustainability, sustainable development and

Sustainability Reporting
2.5

Growth of Reporting in India (during last 2 decades)

2.5.1 Global Reporting Initiative

2.5.2

Transition to IFRS

22

2.5.3

The new initiatives

22

2.5.4 MCA mandated XBRL for specific companies

22

2.5.5 SEBIs mandate to insert Business Responsibility Report

23

2.5.6 The new Companies Act 2013 and CSR spending, Woman
participation on Board
2.5.7 Towards Integrated Reporting
2.6 Limitations of Current Financial Reporting leading to Emergence of
Integrated Reporting

24
25
27

2.6.1

Difficulties in Reporting of Sustainability Issues (DSI)

27

2.6.2

Distrust for Corporate Actions (DCA)

28

2.6.3 Failure of Financial Reporting To Provide A Complete

Picture (FFR)
2.6.4 Need For Incorporation of ESG Issues (ESG)
2.7 Disclosures sought in new form of reporting

29
30
30

2.7.1 System Effectiveness & Process Effectiveness (SYSEFF)

30

2.7.2 Economic, Social and Environmental Impact (SOCENV)

31

2.7.3 Ethical Governance (EGOV)

31

2.8 Perceived Advantages or consequences of adoption of Integrated

Reporting
2.8.1 Ecological Footprints of Operations and Innovations
(ECOOP)

32
32

2.8.2

Stakeholder Engagement (STENG)

33

2.8.3

Staff Engagement (SENG)

34

2.8.4

Competitive Image (IMG)

34

CHAPTER-3: REVIEW OF LITERATURE

36-48

3.1

Introduction

36

3.2

Corporate Reporting and Communication

36

3.3

Non-financial Reporting (CSR)

37

vi

3.4 Environmental Reporting

38

3.5 Sustainability Reporting

41

3.6 Integrated Reporting

CHAPTER-4: XBRL-CONCEPTUAL FRAMEWORK &

LITERATURE REVIEW

49-57

4.1

XBRL as platform for communication of Integrated Reporting

49

4.2

Conceptual Framework of XBRL

49

4.3

Definition

51

4.4

XBRL vis--vis EDI

51

4.5

BENEFITS OF XBRL

55

4.6

Literature Review

56

CHAPTER-5: RESEARCH DESIGN

58-73

5.1

Study Description

58

5.2

Devising the Studys Core Rationales

58

5.3

Study Outline

60

5.4

Questionnaire Based Response Administration

60

5.5

Assumptions

62

5.6

Pre testing and Pilot Study

63

5.7

Population

64

5.8

Sample

65

5.9

Data Collection Method

66

5.10 Sampling Method

66

5.11 Sample Size Requirements

67

5.12 Data Analysis

68

5.13 Scale Development: Antecedents

69

vii

5.13.1 Difficulties In Reporting Of Sustainability Issues (DSI)

69

5.13.2 Distrust for Corporate Actions (DCA)

69

5.13.3 Failure of Financial Reporting To Provide A Complete

Picture (FFR)

70

5.13.4 Lack of Integration of ESG Issues (ESG)

70

5.14 Test Sequence: Antecedents

70

5.14.1 Disclosures sought in new form of reporting

70

5.14.2 System Effectiveness (SYSEFF)

71

5.14.3 Social and Environmental Impact (SOCENV)

71

5.14.4 Ecological Footprints of Operations and Innovations

(ECOOP)

71

5.15 Test Consequences

72

5.15.1 Stakeholder Engagement (STENG)

72

5.15.2 Staff Engagement (SENG)

72

5.15.3 Competitive Advantage (IMG)

72

5.16 Scale testing : Constructs and their Reliability

CHAPTER- 6: EMPIRICAL ANLYSIS AND FINDINGS

72

74-137

6.1

Developing the Integrated Reporting Survey

74

6.2

Item Generation

75

6.3

Data analysis and Findings

77

6.3.1 Initial Item Reduction- Exploratory Factor Analysis

77

6.3.2 Exploratory Factor Analysis: Key Driver Identification

78

6.3.3 The Drivers Scale

79

6.3.4 Extraction based on number of factors

79

6.4

Results of Factor Analysis

80

6.5

Reliability

82

6.6

Validation of Factor Analysis

82

viii

6.7

Confirmatory Factor Analysis (CFA)

83

6.8

Statistical Significance of parameter estimate

89

6.9

Goodness of fit indices

91

6.10 Information to be sought in the new form of reporting

93

6.11 Goodness of fit indices

99

6.12 Perceived advantages of Integrated Reporting

100

6.13 Goodness of fit indices

109

6.14 Structural Equation Modelling (SEM)

110

6.15 Modification Indices

117

6.16 Significance Test

118

6.17 Assessing the Structural Model Validity

118

6.18 Specifying the Structural Model

121

6.19 Addressing the Hypotheses

123

6.20 Analysis Based on Demographic Variables

125

6.21 Data Analysis and Findings

126

CHAPTER-7: SUMMARY FINDINGS, DISCUSSIONS,

CONCLUSIONS AND RECOMMENDATIONS

138-142

7.1

The key findings of this research were:

138

7.2

Significance of the study

139

7.2.1 At the Organizational Level

139

7.2.2 At the National Level

140

7. 3 Recommendations for fostering the awareness on XBRL

141

7.4

141

Areas for further research

REFERENCES
AP PENDIX

ix

143-153
a-l

LIST OF TABLES
Table No.

Title

1.1: Alternative routes of servicing markets

3.1: Top Investing countries in
India 1991-2000
3.2: Country- wise FDI inflows
2000-2015
3.3: Sector-wise FDI inflows 1991-2000 (in %)
3.4: Technical and Financial collaboration 1991-1999
3.5: Top 10 States for FDI
inflows 2000-2014
3.6: The structure of Indian
Ownership participation (197590)
3.7The structure of Indian
ownership participation 19912001
3.8 Sector-wise trends of OFDI
from 2003-2012
3.9 Year-wise position of actual
outflows in respect of outward
FDI & guarantees issued ( USD
million)
3.10 Number of proposals under
approval and automatic route
4.1 Regression results of the
Indian IDP
4.2 IFDI stock, OFDI stock and
GDP of India in 1991-2013
( USD million)
4.3 GDP and NOI position in
1991-2013
4.4 Outward FDI Performance

Index
4.5 Ease of doing business Index
of BRICS nations
4.6BRICS nations performance
in Innovation, technological
readiness, higher education &
training on a scale of 7

136

xii

LIST OF FIGURES AND GRAPHS

Figure No.
1.1: Graphical presentation of
stages of IDP

Title

Page No.
19

1.2: Strength of O- advantages at different IDP- stages

26

3.1: Sector-wise FDI inflows

during 2000-2014

36

3.2: FDI inflows during 1991-2013 (USD million)

50
3.3: Sector-wise OFDI during 1975-1990

53

3.4: Country-wise Distribution of OFDI flows from 1975-1990

54

3.5: Sector-wise OFDI during

1991-2001
3.6:Ccountry-wise distribution of
OFDI flows during 1991-2001

60
76

3.7: Sector-wise OFDI(2003-04)

88

3.8: Sector-wise OFDI(2003-12)

97

3.9: Outward FDI Flows ( USD million)

105

3.10: Country-wise distribution of

OFDI flows 2001-02

112

3.11: Country-wise distribution of outward FDI from 2003-2012

113

3.12: Top Destinations for OFDI

during 2013( amount in USD
million)

116

4.1 Stock of IFDI and OFDI (USD million)

4.2 Net outward Investment Position of India (1991-2013) inUSD million

4.3 NOI/GDP per capita
(1991-2013)

xiv

LIST OF ABBREVIATIONS
IFDI

Inward Foreign Direct Investment

OFDI

Outward Foreign Direct Investment

GDP

Gross Domestic Product

NOIP

Net Outward Investment Position

NOI

Net Outward Investment

M&As

Mergers and Acquisitions

FDI

Foreign Direct Investment

OECD

Organisation for Economic Co-operation and Development

UNCTAD

United Nations Conference on Trade and Development

DIPP

Department of Industrial Policy & Promotion

RBI

Reserve Bank of India

IMF

International Monetary Fund

CAGR

Compound Annual Growth Rate

Ownership

Location

Internalization

R&D

Research and Development

OFDIPI

Outward FDI Performance Index

DTAA

Double Taxation Avoidance Agreements

FEMA

Foreign Exchange Management Act

FERA

Foreign Exchange Regulation Act

IDP

Investment Development Path

TWMNC

Third World Multinational Companies

LLL

Linkage, Leverage and Learn

OLI

Ownership, location and internalization

SEZ

Special economic zones

US

United States

WIR

World Investment Report

xv

MNEs
EMEs

Multinational Enterprises
Emerging Market Economies

JVs

Joint ventures

WOS

Wholly owned subsidiaries

IJVs

International joint ventures

SAARC

South Asian Association for Regional Co-operation

PSUs

Public sector undertakings

ADRs/GDRs

American depository receipts/ Global depository receipts

S&E

Science and Engineering

TNC

Transnational corporations

BRICS

Brazil, Russia, India , China & South Africa

UNESCO

The United Nations Educational, Scientific and Cultural Organization

IAMAI

Internet & Mobile Association of India

NSF

National Science Foundation

IIT

Indian Institute of Technology

NISTADS

National Institute of Science, Technology and Development Studies

CIS

Commonwealth Independent States

IT

Information Technology

MNCs
AAGR

UK
OEMs

Multinational Corporations
Annual average growth rate
United Kingdom
Original Equipment Manufacturers

xvi