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The Role of Institutional Investors in Lowering Information Asymmetry: Study on Mandatory Regulation of Integrated Reporting Implementation

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Complex, Intelligent and Software Intensive Systems (CISIS 2022)

Part of the book series: Lecture Notes in Networks and Systems ((LNNS,volume 497))

Abstract

The purpose of this study is to examine the effect of integrated reporting implementation as a mandatory regulation in reducing information asymmetry, and how the role of institutional investors is related to integrated reporting implementation. The sample of this research was listed companies in Johannesburg Stock Exchange, South Africa, year 2011–2015. The integrated report quality measurement is based on the assessments made by EY, Information asymmetry was measured using the annual average of bid-ask spread and institutional investor measured by the percentage of stock ownership by institution. Using 87 companies (299 firm-year observations), this research proves that the quality of integrated reporting and the proportion of stock ownership by institutional investors is negatively associated with information asymmetry. The result also confirmed the prior prediction that integrated reporting tends to succeed in reducing information asymmetry at firms with a high proportion of institutional investors.

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Notes

  1. 1.

    The International Integrated Reporting Council (IIRC) is a global coalition of several official boards and organizations. They are regulators, investors, companies, standard setters, accounting professionals and governmental organizations. Through this coalition, They together promote a better communication about value creation as a next step in the development of corporate reporting [11].

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Authors and Affiliations

  1. Faculty of Economics, Universitas Islam Sultan Agung, Semarang, Indonesia

    Naila Najihah &  Mutoharoh

Authors
  1. Naila Najihah
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  2. Mutoharoh
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Correspondence to Naila Najihah .

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Editors and Affiliations

  1. Department of Information and Communication Engineering, Fukuoka Institute of Technology, Fukuoka, Japan

    Leonard Barolli

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Najihah, N., Mutoharoh (2022). The Role of Institutional Investors in Lowering Information Asymmetry: Study on Mandatory Regulation of Integrated Reporting Implementation. In: Barolli, L. (eds) Complex, Intelligent and Software Intensive Systems. CISIS 2022. Lecture Notes in Networks and Systems, vol 497. Springer, Cham. https://doi.org/10.1007/978-3-031-08812-4_38

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