Assessing Reporting Quality in South Africa's Basic Materials Industry

What is it about?

This study dives into the quality of reports from companies in South Africa's basic materials industry over 12 years (2008-2020). It aims to see if integrated reporting, which includes more than just financial details, has brought positive changes and if reporting has improved over time. The findings suggest that reports in the basic materials industry have become longer, less readable, and use specific language tones that can create biases. This decline in quality may mislead investors, challenge regulatory oversight, and affect a company's social license to operate. The study recommends that companies simplify and neutralize their reports to make them more accessible and useful, and it suggests investors demand better reporting while regulators tighten guidelines.

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Photo by ThisisEngineering RAEng on Unsplash

Photo by ThisisEngineering RAEng on Unsplash

Why is it important?

The findings indicate a decline in the quality of these reports over a 12-year period, with reports becoming longer, less readable, and potentially biased in language tone. This decline has significant implications, as it may mislead investors, challenge regulatory oversight, and impact a company's social license to operate. The study's recommendations for companies to simplify and neutralize their reports aim to make the information more accessible and useful for a wider audience, including investors and stakeholders. The call for investors to demand better reporting and regulators to tighten guidelines underscores the broader impact of this research on corporate transparency, accountability, and the overall effectiveness of reporting practices in the basic materials industry. Improving the quality of reports can contribute to better decision-making by stakeholders, fostering trust and responsible corporate behavior.