Research Article | Volume 5 Issue 2 (April-June, 2024) | Pages 1 - 21
The Role of Integrated Reports in Promoting Sustainable Development and its Impact on the Earnings Quality
College of Administration and Economics, University of Fallujah, Iraq
Under a Creative Commons license
Open Access
Feb. 7, 2024
Feb. 20, 2024
March 30, 2024
April 30, 2024

This research aims to examine the impact of integrated reporting on earnings quality by promoting sustainable development. For this purpose, seven variables were chosen for this study, distributed as follows: Three variables for integrated reports, namely: (1) strategic direction. (2) responsibility for integrated reporting; (3) Qualitative characteristics of the integrated report. And four variables of sustainable development, namely: (1) the economic dimension; (2) the environmental dimension; (3) social distancing; (4) After corporate governance. While the dependent variable is the earnings quality. The variables (integrated reports and sustainable development) are measured through (84) indicators for integrated reports; While the variable of sustainable development was measured through (43) indicators, while the variable of earnings quality was measured through the modified Jones 1995 model. The sample of the current study consists of 25 companies and banks involved under the Iraq Stock Exchange. The study reached a number of results, the most important of which is that the integrated reports affect the earnings quality in a negative way, and when introducing the sustainable development variable as an intermediate variable changed the result, and the integrated reports affected the earnings quality in a positive way, meaning that the earnings quality improved when companies paid attention to the factor of sustainable development in their integrated reports. In part, our study found that the strategic orientation; Responsibility for integrated reporting and other qualitative characteristics of integrated reporting promote sustainable development. Our study also found that liability for integrated reporting and other qualitative characteristics of integrated reporting improve earnings quality positively. While we found that corporate governance and the environmental dimension of sustainable development are the only ones that affect the quality of profits, the study recommended that when companies want to improve the quality of their profits, they must focus more seriously on presenting the dimensions of sustainable development in integrated reports in a way that makes them more visible.

Integrated reports
Sustainable development
Earnings quality
Iraqi companies

Interest in the process of promoting sustainable development has increased after the outbreak of many financial crises and rapid economic fluctuations that affected the process of predicting and guarding against them, as well as the various climate changes that the world has faced in recent years. Given the diversity of events that have arisen recently on the economic, environmental and social levels, the concept of sustainable development It has also developed in parallel to include the economic, environmental and social aspects, which has created an obligation for all companies to contribute to the three levels of sustainability. That is, companies cannot operate in isolation from their surrounding environment, so any expansion of their activities or business will depend on the suitability of those activities to the owners. The interest that is linked to all of them, so sustainable development has become parallel to any activity or work carried out by the company and cannot be separated from its various activities, and the goals of sustainable development must be compatible with the activities of different companies.


It is expected that at the beginning of the fourth decade of the year 2023, the population of the Earth will be about 9 billion or more. These billions of people are searching for a foothold in the world, and the poor struggle to find food, drinking water, health care, and the shelter they need simply to survive. As for those who are... Just above the poverty line, they are looking for better prosperity and a brighter future for their children. Through these class differences between the Earth’s societies, we notice that the global economy is not only unequal, but also poses a noticeable threat to the Earth itself, as humanity depends on nature to obtain food and water, the materials necessary for survival and safety. From terrible environmental threats, such as epidemics, natural disasters, or financial disasters that befall the world's economies. Sustainable development therefore attempts to understand the interactions of three complex systems: the global economy, global society, and the Earth's physical environment. Which means that sustainable development will inevitably recommend a set of goals that the world should aspire to. Countries around the world will adopt the Sustainable Development Goals specifically to help guide the future course of economic and social development on the planet. In this normative (or moral) sense, sustainable development requires a world in which economic progress is widespread; Poverty is eliminated; Social trust is encouraged through policies that strengthen the community; The environment is protected from human-caused degradation. In short, it can be said that sustainable development requires comprehensive, socially and environmentally sustainable economic growth.


Sustainable development issues that led to the emergence of the Sustainable Development Goals impose restrictions on the availability of capital on which companies depend, and this framework is consistent with the International Integrated Reports framework (IR-Integrated Reports) issued by the International Integrated Financial Reporting Council. Integrated reports are a tool for comprehensive disclosure, which takes sustainable development as an essential aspect in reporting corporate activities. Integrated reports represent the production of a single report that combines the financial and non-financial information contained in the company's annual financial report with the information contained in the company's sustainability and social responsibility report. If companies adopt an integrated reporting framework, they will be able to contribute to achieving the sustainable development goals by applying integrated thinking, and they will also be able to communicate their contribution to the sustainable development goals and how they respond to the risks and opportunities of sustainable development. Therefore, companies are not only thinking about improving their image by maximizing their profits and increasing the market value of their shares, as much as they rely on providing financial and non-financial information to stakeholders of all kinds, classes, and aspirations through integrated reports to evaluate their performance in the correct manner, which will be reflected in their reputation and market value, as well as achieving profits. Sustainable, and on this basis, companies that seek to improve the quality of their profits always seek to present all their activities with integrated reports to stakeholders in order to bridge the information gap represented by the asymmetry in information between management and stakeholders, and this will lead to increased investments in capital. The company will thus enhance the market value of its shares.


Through the previous review, the importance of the research becomes clear by finding the impact of integrated reports in promoting sustainable development and its reflection on the Earnings quality in a sample of Iraqi companies and banks listed on the Iraqi Stock Exchange for the period from 2015 to 2022.


Research problem

The International Integrated Reporting Council (IIRC) launched in 2011 to initiate the process of preparing an integrated framework for preparing the integrated report or integrated reports. The integrated reporting framework was published in 2013. This framework is a new stage in the field of preparing reports by companies, as it includes Integrated reporting, which emphasizes the presentation of all facets of a company's activity, including financial and non-financial information of companies, including sustainability reports, in a single report in a cohesive manner that provides a comprehensive view of the company's business. The IIRC suggests that integrated reporting has an impact for companies that adopt this framework in improving the quality of earnings. Through companies placing all their activities and reporting them to both internal and external users to reduce the information asymmetry gap between management and multiple stakeholders.


Given the novelty of the integrated reporting framework in relation to the Iraqi environment, in addition to the scarcity of studies that dealt with the integrated reporting framework in terms of sustainable development, which is one of the issues that has received the most attention in the past period, therefore the research gap is represented in the scarcity of accounting studies in the field of studying the impact of integrated reports in promoting development. Sustainable growth and its implications for the Earnings quality in the Iraqi business environment. Accordingly, the research problem is represented by the researcher’s attempt to answer the following questions:

  1. What is the impact of integrated reports on promoting sustainable development in Iraqi companies and banks?

  2. What is the impact of integrated reporting and sustainable development on the Earnings quality in Iraqi companies and banks?

  3. The extent to which the Earnings quality is affected by the relationship between integrated reporting and sustainable development.


Research Aims:

The objectives of the research are to determine the impact of integrated reports in promoting sustainable development in a sample of Iraqi industrial companies and banks and its reflection on the Earnings quality for the period from 2015 to 2022 AD. From this objective there are sub-objectives that can be stated below:

  1. Learn about the framework of integrated reporting, sustainable development and quality of profits.

  2. Measuring the impact of integrated reports on promoting sustainable development.

  3. Measuring the impact of integrated reporting and sustainable development on the quality of profits.

Literature Review

There are many studies that have studied integrated reports and linked them to multiple problems, and many results have been reached in these studies. The study (Shanan, 2020) [1] conducted on Egyptian companies in terms of developing a proposed framework for narrative disclosure in integrated reports and measuring the impact of this on enhancing the value of the enterprise, as well as determining the effect of narrative disclosure on activating integrated reports, was found. This study found a number of results, which were: One of the most prominent results it reached is that it is possible to develop a framework for narrative disclosure in integrated reports and measure the impact of that on enhancing the value of the facility. There is also an effect of narrative disclosure on activating integrated reports and there is an effect of integrated reports on enhancing the value of the facility. There is an effect of narrative disclosure on enhancing the value of the facility.


The study (Al-Saadi, 2021) [2] concluded that there is an effect between the level of disclosure in application of the standards of integrated reporting on sustainability axes and the value of the banks sampled in the study. The study (Abdul Wahed, 2022) [3] also sees the existence of a statistically significant relationship between accounting disclosure for integrated business reports and improving the quality of information, and the existence of a statistically significant relationship between accounting disclosure for integrated business reports and the accuracy of financial analysts’ forecasts, achieving many benefits for all stakeholders and financial analysts from conducting the best evaluation. For the performance of companies, and there are also significant differences between the categories of the study regarding the importance of non-financial reports and the performance of companies in light of the virus pandemic. Covid-19 Corona).

A study (Katea, 2022) [4] concluded that cultural dimensions have a role in enhancing the quality of integrated reports, resulting from the social responsibility for managing economic units, including organizational culture and administrative practices. While the study (Marita and Heriningsih, 2016) [5] found that the basics of providing disclosures, including integrated reports, do not affect the company’s value. This means that not all components in integrated reporting can impact a company's value.


According to agency theory, the study (Victoria, Kamran and Seema, 2020) [6] found that there is a positive relationship between the voluntary adoption of the practice of integrated reporting and the quality of profits. Moreover, voluntary adoption of integrated reporting is positively related to earnings quality for firms experiencing high agency costs, and the effect of firm-level agency costs has little effect on the relationship between voluntary IR practice and the level of integration. Overall, our findings are consistent with the view that integrated reporting has an increasingly positive impact on the quality of accounting information. This result is consistent with the findings of the study (Shanti and all, 2018) [7], which also found that the application of integrated reports has a positive impact on the quality of profits. This means that disclosing integrated reports on financial and non-financial information results in high earnings quality. Quite the contrary, the study (Eloff and Steenkamp, 2022) [8] found a statistically significant negative correlation between earnings quality and integrated reporting.


According to the signaling and supervision theory, the study (Bonareri and all, 2022) [9] found that integrated reporting and earnings quality have a positive relationship. As voluntary adoption of integrated reporting is associated with higher quality of profits, this result is consistent with the study (Victoria, Kamran and Seema, 2020) [6] and the study (Shanti and all, 2018) [7].


 As for sustainable development, the study (Olena and all, 2022) [10] reached the conclusion that preparing financial reports does not provide full disclosure of information related to intangible assets (especially in the context of introducing the principles of sustainable development and continuing their implementation), and therefore, determining the location of assets is not the concreteness within the integrated reporting structure requires detailed consideration. While the study (Anria and Van, 2013) [11] found that although many companies are trying to create integrated reports, the level of integration is still very low. Few companies have incorporated or recognized the importance of environmental and social sustainability in achieving long-term success.

Theoretical framework of the research:

Integrated reports:

In 2006, a proposal was presented towards unifying financial reports and sustainability reports into one report with the aim of eliminating influence and confusion among stakeholders. An international alliance for this loan was formed in 2010, consisting of investors, regulators, and non-governmental accounting standard setters, as a beginning to move to the international IR stage to help it meet All stakeholder requirements. [2] In April 2013, the International Integrated Reporting Council (IIRC) issued its draft consultation framework on integrated reporting, which provides guidelines on communicating with stakeholders. Governance, performance and expectations. In its December 2013 Integrated Reporting Framework, the IIRC promotes a more integrated approach to corporate reporting by improving the quality and quantity of information distributed to providers of financial capital including shareholders and other stakeholders. The Integrated Reporting (IR) framework explains how companies should communicate with their shareholders. The Integrated Report aims to enhance transparency and address how the organization's performance will benefit both shareholders and stakeholders. The purpose of the report is to be an additional extension of the company's external financial reports and targets a diverse audience in various areas of life. IIRC has also released a prototype to help aggregate non-financial information with financial information. [12]


IR preparation is a new concept and idea that has recently taken the business landscape by storm, but it builds on previous reporting frameworks. While the specific components of an IR setup, including the idea of a multi-capital model, represent innovative thinking, connecting streaming data more broadly is not a new idea. However, what is new and very important is that as IR preparation becomes more widespread and the reporting of non-financial data becomes standard. [13]. We can show the general framework of integrated reports in Figure No. (1)





Figure No. (1): General framework for integrated reports 


Source: smith, 2019, p.1 [13]


The concept of integrated reporting:

The concept of integrated reporting revolves around concise communication of how the economic unit's strategy, governance, performance and prospects, in the context of its external environment, create and generate value in the short, medium and long term [4]. An integrated report means a report that combines the financial and narrative information found in the company’s annual report with non-financial information (such as environmental, social, and governance issues) and narrative information found in the “company’s social networks.” “Responsibility” or “Sustainability” reporting. The integration of financial and non-financial reporting is about much more than the simple issuance of a combined paper document. [14]


Objectives of integrated reports:

Integrated reports aim to bring about a fundamental change in the way economic units are managed and reports are presented to stakeholders to make decisions, by establishing relationships between the components of the economic unit, production and administrative, and other functions, and linking them with the elements of capital that use or influence them, to provide a long-term vision, It is part of the prevailing practices in the economic business environment, which lead to allocating capital efficiently and productively, and supporting financial stability. These goals include the following: [4]

  1. Improving the quality of information available to capital providers to achieve greater efficiency and productivity

  2. Providing a more consistent and effective approach to reporting by adopting standards and conveying a complete picture of all the main factors that affect value creation over time.

  3. Enhancing accountability and supervision of the management of financial, intellectual, human, and social assets and enhancing understanding of the interconnection between them.


Benefits of integrated reporting:

The researchers (Chiara & Sara) [15] summarized the benefits in three main categories for companies that adopt integrated reporting, which are: (1) internal benefits; (2) Foreign market benefits and (3) benefits from organizational risk management. The first type of internal benefits relates to reduced reputational risk and better use of internal resources. On the other hand, the benefits of an external market are that stakeholders may be better informed about the financial and non-financial performance of the company [15]. Clarifying and focusing on the potential benefits and opportunities associated with adopting an integrated reporting framework is a critical step towards achieving initial adoption and sustaining implementation in the medium to long term. When trying to move from traditional financial reporting to more comprehensive integrated reporting, it is important for management to be able to point to changes and initiatives already underway in other market-leading organizations. On this basis, Smith explained the benefits and advantages resulting from implementing an integrated report as follows: [13]

  1. A more strategic and forward-looking reporting framework provides much-needed information and clarification to stakeholders seeking to evaluate the current and projected performance of the organization. It's fairly clear that shareholders and stakeholders alike are interested in what the management team has planned going forward.

  2. In addition to the benefit of integrated reporting from a data perspective, reporting different types of information via the multiple capital model provides users with important information for analysis purposes.

  3. In addition to the benefits gained from the general framework of integrated reporting for external beneficiaries, this framework has an equally important benefit for management and employees, as the integrated reporting framework helps management specialists meet governance expectations, shareholder expectations, and human resources development goals.


Introductions to preparing integrated reports:

Points of view differed in presenting the entries for the integrated report, and these entries are summarized in three forms, and the general trend is towards one entry, but the difference lies only in the method of compilation, which is as follows: [2]


1- Introduction to the combined report: The integrated report is a single report that combines financial matters and sustainability matters. Through this, the importance of financial performance and sustainability performance is clarified and that they are two overlapping areas of the overall performance of the economic unit.

2- Introduction to the integrated report: In this report, the links between financial performance and sustainability are explained, and the financial effects of sustainability are disclosed, as well as the relationship of sustainability to business strategy.

3- Introduction to the overall report: A single report is prepared that includes the business and stakeholders, and the company’s value is expressed. Some economic units call it a single integrated report.


Steps for proper and effective adoption of the preparation of integrated reports on the dimensions of sustainable development:

   The most important steps through which the integrated reporting framework can be adopted within the framework of sustainable development can be identified: [16]

  1. Create sustainable value – It is important to create sustainability value in your organization, what this value means in the context of the organization, strategic decisions, performance, and how your business model creates value for your organization. The business model must include inputs, processes, and outputs and evaluate them for all dimensions of sustainability for each form, and indicate their integrated effects on creating sustainable value for all stakeholders. This can be illustrated in Figure No. (2).

  2. Sustainability Performance Strengths and Concerns - Identify and evaluate the positive and negative impacts of the trends that make up your organization's sustainability performance dimensions as proposed by the International Reporting Council in relation to financial, social, relational, intellectual, environment and human resources.

  3. Identify non-financial metrics for the non-financial dimensions of sustainability for each form (governance, social, ethical and environmental) that are important in creating sustainable value and use them alongside financial sustainability performance metrics in decision making.

  4. Link non-financial sustainability performance measures to the sustainable financial success of the business. Integrated performance of financial and non-financial sustainability is key to achieving the goal of sustainable value creation.

  5. Integrate strategic objectives, performance and risks across the financial and non-financial information dimensions of sustainability activities and strengthen this linkage throughout the organization.

  6. Use comprehensive and integrated internal and external reports to effectively communicate your business sustainability strategic decisions, actions and performance to internal and external users of sustainability reports.



Figure No :(2) Creating sustainable value

Resource: IIRC. (2013) [17]. International Integrated Reporting Council

Figure 2 illustrates the process of creating sustainable value through integrated reporting that includes six pillars along with mission, vision and business model. In fact, IR focuses on six pillars, namely: (1) Financial capital. (2) Factory capital. (3) Human capital. (4) Intellectual capital. (5) Natural capital and (6) Social capital. IIRC notes that the role of the six forms of capital in creating value changes for different organizations, operating in different industries, under different contextual factors. [17].



Key principles of integrated reporting:

In order to produce an effective and integrated report, companies must adhere to the following main principles of integrated reporting, which are as follows: [15]

1. Strategic focus and future direction: The integrated report should provide insight into the organization's strategy and how this strategy relates to the organization's ability to create and utilize value in the short, medium and long term and its impact on its forms of capital.


2. Communicating information: The integrated report must appear as a comprehensive story of value creation, as well as the synthesis and interconnection between the material components that are essential to increasing the organization’s ability to create value over time.


3. Stakeholder responsiveness: The integrated report should provide insight into the quality of the organization's relationships with key stakeholders and how and to what extent the organization understands, takes into account and responds to their legitimate needs, interests and expectations.

4. Materiality and brevity: The integrated report must provide concise information that is essential for assessing the organization's ability to create value in the short, medium and long term.


5. Reliability and completeness: An integrated report must include all material matters, both positive and negative, in a balanced manner and free of material errors.


6. Consistency and comparability: The information in an integrated report should be presented on a consistent basis over time and in a manner that enables comparison with other organizations, to the extent that it is material to the organization's value creation issue.


Challenges of adopting the integrated reporting framework:

 Among the most prominent challenges facing the preparation of integrated reports are: [4]

1- Regulations: Local regulations, instructions, and laws often govern reporting on the activities of the economic unit, so the degree of integrated reporting is likely to vary, according to the legal environment in which the economic unit operates.


2- The Board of Directors: In many cases, reporting in integrated reports is directed towards specific parties according to the organizational culture of the economic unit, or the desires of senior management.


3- Management responsibility: Preparing integrated reports will cover new topics and focus more on the future. Concerns about the responsibility of those charged with governance will require fair and consistent rules of governance.


4- Confidentiality of information: There must be a balance between the desire to disclose and avoid revealing competitive information.


5- Capacity building: Building knowledge and experience through the reporting system is essential for long-term success.


6- Information systems: Economic units will need to establish or enhance information systems to collect, analyze and classify data on financial and non-financial activities.


7- Legislation, regulations and standards: Economic units are required to review and coordinate legislation, regulations and standards, as well as other resources and regulatory procedures such as environmental, trading and securities laws.


8- Analytical methods: Analytical tools are evolving that include a wide range of financial and non-financial factors, to develop appropriate disclosures for analyzing investments.

9- Investment supply chain: Many of the current compensation and incentive structures along the investment supply chain focus on the short-term, as steps are taken by regulatory and non-regulatory bodies to rebalance through a set of measures that affect long-term investment returns.


10- Independent assurance: It represents an important role in capital markets. When the integrated report is the main report for the economic unit, the beneficiaries will want this report to be subject to independent audit.


The difference between integrated reporting, sustainability reporting and financial reporting:

The difference between the above three reports can be briefly stated in the table 1 below:


Table No (1) Distinguish between financial reports, sustainability reports, and IR


financial reports

Sustainability reports

Integrated reports


the goal

Shareholders and investors

Multiple participants

First, the financial and investor capital, and then all other parties.

Preparation is mandatory









Generally accepted accounting principles (IFRS) and international standards (IAS)

Global Reporting Initiative (GRI)

Integrated Reporting Committee (IIRS)

Source: (Al-Saudi, 2021, p. 50


The researcher believes that integrated reports complement sustainability reports and eliminate the shortcomings inherent in financial reports. Therefore, they are called integrated because they provide a comprehensive picture of the economic unit, and that adopting an integrated reporting framework by companies is extremely important to support their business model in achieving a sustainable increase in its value. Which will be reflected in the promotion of sustainable development in various fields. Integrated reports will also provide a confirmatory stream of information received by stakeholders of all kinds, whether financial or non-financial, which will reduce the information asymmetry gap between the parties as well as enhance their confidence in the status of the economic unit. This does not mean that the role of integrated reports is limited to delivering information to beneficiaries, but rather that they work to enhance the interconnection between the economic, social and environmental elements within the economic unit, which are the main pillars of sustainable development.


Sustainable development:

The concept of sustainable development:

 The development of the business environment has led to major changes in companies' strategies, structures, systems and tools. The importance of social and environmental aspects of companies has increased, which has become an unavoidable issue for companies in response to internal and external pressures [18]. Since then, there has been a growing awareness internationally of these influences. The concept of sustainable development was introduced for the first time in the WCED (World Commission on Environment and Development) report. This report attempted to balance the conflicting forces of economic efficiency, social justice and environmental awareness as key values. This balance has been defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” [19]. It has also been defined as development that seeks to achieve societal and environmental justice while simultaneously seeking economic gains. If companies want to achieve long-term economic gains, they must not ignore the goal of environmental and social responsibility for sustainable development. [20]


Characteristics of sustainable development:

 In order to know sustainable development more clearly, we must know its characteristics and philosophical dimensions that distinguish it in order for it to have a sustainable character, which are as follows: [21]

- Inclusion of development goals, as the modern concept of development is not limited to raising the level of countries’ national income, but rather includes progress in all areas of life, including education, health services, and others.

Development depends mainly on its various components from within the geographical space, especially the main joints of those components represented by humans and the environment. This characteristic gives continuity to the needs of the current generation without harming the ability of subsequent generations to meet their own needs.

- The ability to overcome obstacles and narrow the gap between the developing country and developed countries through the fact that sustainable development achieves growth, the accumulation of knowledge, and continued development in the material and moral sphere of the country in a way that ensures the non-depletion of natural resources.


Sustainable development goals:

The SDGs were developed through a bottom-up consultative process and are intended to be comprehensive and global in nature, meaning they include social, economic and environmental goals. The SDGs were first formally discussed at the United Nations Conference on Sustainable Development held in Rio de Janeiro in June 2012 (Rio+20). The General Assembly's 30-member Open Working Group (OWG) was tasked with preparing a proposal on the SDGs, as well as a specific list of measurable goals and indicators to ensure that progress in achieving the SDGs can be tracked. On 25 September 2015, the United Nations General Assembly approved the OWG's proposals and used them as a basis for developing the 2030 Agenda. The new Sustainable Development Goals entered into force in September 2015 [22]. The introduction to the Sustainable Development Goals states the following: [23]


- Respect all human rights and dignity, the rule of law, justice, equality and non-discrimination; Respect for ethnicity and cultural diversity; Equality of opportunity that allows for the full realization of human potential and contribution to common prosperity. Building a world that invests in its children and where every child grows up free of violence and exploitation. Every woman and girl enjoy full gender equality and all legal, social and economic barriers to their empowerment are removed.

- Building a world that enjoys sustainable and inclusive economic growth and decent work for all. Patterns of consumption, production and use of all natural resources - from air to land, from rivers, lakes and aquifers to oceans and seas - are sustainable.

- Achieving good governance. Governments must perform many essential functions to enable societies to thrive. Among these basic functions of government are the provision of social services such as health care and education; Providing infrastructure such as roads, ports and energy; Protecting individuals from crime and violence; Promote basic science and new technologies; And implementing environmental protection regulations. [24]


 Based on the above, sustainable development has three dimensions: economic, environmental and social. These dimensions are often referred to as the triple bottom line, and are used to measure the success of a particular program or project development. It is important that each element is given equal attention in order to ensure a sustainable result [25]. We can explain it as follows: [26]


- The economic dimension: Sustainability means the continuity and maximization of economic well-being for the longest possible period of time by providing the components of human well-being with the best quality, such as: food, housing, transportation, clothing, health, and education.


- The environmental dimension: The environmental dimension of sustainable development focuses on taking into account environmental limits, so that each ecosystem has certain limits of consumption and depletion that cannot be exceeded. If these limits are exceeded, it leads to the deterioration of the ecosystem. On this basis, limits must be set against consumption, population growth, pollution, poor production patterns, water depletion, deforestation, and soil erosion.

- The social dimension: The social dimension of sustainable development focuses on the fact that the human being constitutes the essence of development and its ultimate goal by paying attention to social justice, combating poverty, and providing social services to all those in need, in addition to ensuring democracy through the participation of peoples in decision-making with full transparency.


Guiding principles for innovation in sustainable development goals

The guiding principles for innovation in sustainable development goals were presented at the Fourth International Forum for Promoting the United Nations Sustainable Development Goals 2030, and can be presented as follows: [27]

- The principle of strategic planning

- The principle of basing the strategy preparation process on good technical analysis: it depends on careful analysis of the current situation, future trends, and expected risks, while identifying the links between local and global challenges.

- The principle of setting realistic and flexible policy goals.

- The principle of interconnection between the budget and strategic priorities.

- The principle of integrated policy between different sectors.

- The principle of good governance: To achieve sustainable development, governance must be based on transparency in decision-making, participation of citizens and civil society in decision-making, responsibility, accountability and accountability in implementation, and there must be clear foundations.

    In order for us to be able to innovate for sustainable development, we need effective tools and policies, which can be presented as follows:


 Figure No. (3): Sustainable development innovation tools



Sustainable development performance standards:

 In 2012, the International Finance Corporation of the World Bank issued several standards for environmental, social and economic performance that companies must adhere to in order to achieve the requirements of sustainable development. The first standard deals with the assessment and management of social and environmental risks and impacts, while the second standard deals with employment and workers’ conditions, while the third standard deals with Efficient use of resources and prevention of pollution. The fourth criterion relates to the health, safety and security of the local community. [28]


Earnings Quality:

 Over the past years, many researchers have provided many definitions of earnings quality and have tried to develop a unified definition for this term. We can review some of these definitions that address earnings quality, as follows:

The Earnings quality is defined as the profits reported by the company, which reflect the true reality of the company's financial operations and the economic essence of operational activities, without management intervention. In other words, the company's published profits have an actual, tangible cash presence and the numbers do not contain any exaggerations or probabilistic numbers. [29]


It is also defined as profits that are characterized by the main characteristics of accounting information, which are suitability and reliability, which represent the main objectives of financial reporting as they enable users of financial statements, including investors and lenders, to make rational decisions.


As defined by (Mosleh, 2015) [30] it is the extent to which the profits announced by banks honestly and fairly reflect the bank’s real profits, that is, they are actual, tangible profits achieved and free of exaggerations and probabilistic expectations. [30]


It was also known more broadly through three trends, as follows: [31]

  1. Disclosure of the components of earnings components that reflect current operating performance.

  2. The quality indicators of financial profits reflect operational performance.

  3. The Earnings quality accurately reflects the value of the economic unit.

    The researcher believes that the Earnings quality is difficult to determine, and although there are no specific criteria for evaluating them, there are many factors that can be taken into consideration when evaluating the quality of profits


In general, earnings quality can generally be summarized as the degree to which earnings are cash or non-cash, real or unreal, and based on accurate measurement or estimates that are subject to change. An assessment of earnings quality will help the user of financial statements make judgments about the validity and reliability of current results and future prospects. [32]


Search model:

The mathematical model below is concerned with giving a clear picture of the relationship of influence between the independent variables and the dependent variable, and it can be represented in Figure No. (4) and as follows:



Figure No. (4): The influence relationship between the study variables


Below in table 2 we know the research variables and measurement methods:


Table No. (2): Introduction to the research variables


Below is the mathematical formulation of the model:

Research assumes:

 The hypotheses that we have presented below are related to the problem at hand as well as to the goals to be achieved, which represent a prior answer to the research questions. On this basis, the researcher assumes the following:

H1: Integrated reports have a positive impact on promoting sustainable development in Iraqi companies and banks, and several sub-hypotheses fall under this main hypothesis:

H1a: The strategic direction of the economic unit affects the promotion of sustainable development in Iraqi companies and banks.

H1b: Responsibility for integrated reporting affects the promotion of sustainable development in Iraqi companies and banks.

H1c: The qualitative characteristics of integrated reports affect the promotion of sustainable development in Iraqi companies and banks.

H2: Integrated reports affect the Earnings quality in Iraqi companies and banks, and several sub-hypotheses fall under this hypothesis, as follows:

H2a: The strategic orientation of the economic unit affects the Earnings quality in Iraqi companies and banks.

H2b: Responsibility for integrated reporting affects the Earnings quality in Iraqi companies and banks.

H2c: The qualitative characteristics of integrated reports affect the Earnings quality in Iraqi companies and banks.

H3: The dimensions of sustainable development affect the Earnings quality in Iraqi companies and banks, and the sub-hypotheses fall under it, as follows:

H3a: The corporate governance dimension affects the Earnings quality in Iraqi companies and banks.

H3b: The social dimension affects the Earnings quality in Iraqi companies and banks.

H3c: The economic dimension affects the Earnings quality in Iraqi companies and banks.

H3d: The environmental dimension affects the Earnings quality in Iraqi companies and banks.

H4: Integrated reports enhance the Earnings quality in Iraqi companies and banks in the presence of the sustainable development factor.

Research methodology and practical procedures:

The approved approach and procedures that the researcher will adopt to reach results that enable him to prove or deny the research hypotheses in order to reach the research objectives will be based on the following:

  1. Adopting the deductive approach in presenting the theoretical aspect of the study in all its dimensions by relying on Arab and foreign references and sources and research published in foreign and Arab periodicals and relying on master’s theses and foreign and Arab doctoral dissertations that dealt with the dimensions of this research.

  2. Adopting the descriptive statistical approach in analyzing and studying the opinions of the study sample through a questionnaire form designed to suit the variables of the study, in addition to processing the financial data related to the study sample in an appropriate statistical manner, with the aim of finding the influence relationship between the variables, using multiple statistical tools.


Search limits:

The limits of the research can be stated in two directions:

  1. Spatial boundaries: The spatial boundaries of the research are represented by a sample of Iraqi companies and banks regulating the Iraqi securities market.

  2. Temporal limits: The time limits for the information obtained, whether financial information or information on financial reporting indicators, represent one period of time, which is the year 2018.


Information collection sources:

The researcher relied on collecting information regarding the research variables through the following:

Primary sources: financial statements of Iraqi companies and banks published in financial reports on the Iraq Stock Exchange website, in addition to using the questionnaire form that was distributed to the study sample to verify the extent of application of the dimensions of the research variables.

Secondary sources: To form the theoretical framework for the research, the researcher relied on foreign and Arabic books, master’s theses, doctoral dissertations, foreign and local periodicals, and other sources and documents that could establish a good theoretical basis for the dimensions of the study.


Field study:

Research population and sample:

The research community is represented by Iraqi companies and banks belonging to the Iraqi Stock Exchange, and a sample of this community was selected using a random sampling method with a number of (25) economic units (company and bank).


Research method:

To reach results that would achieve the objectives of the study, and given the different nature of the data related to the research variables, the researcher therefore relied on two tools to initiate the research procedures, which are:

  1. Questionnaire: The questionnaire was relied upon to measure the dimensions of the integrated reporting variable and the dimensions of sustainable development. (25) questionnaires were distributed to the study sample to demonstrate the extent of application of the indicators set in the paragraphs of the questionnaire. The questionnaire for the integrated reporting variable included (84) indicators distributed over: Three dimensions (strategic direction, responsibility for integrated reports, qualitative characteristics of the integrated report), as these dimensions include indicators (57, 5, 22) respectively. While the sustainable development variable includes (43) indicators distributed over four dimensions (the economic, social, environmental, and governance dimensions). These dimensions include indicators of (9, 17, 9, 8) respectively. These variables were treated as variables. Fake is answered with (1) if the paragraph is true, and (0) otherwise. As for extracting data from the questionnaire, it was dealt with according to the weight of the answer for each dimension, as follows:

- For the economic dimension, the social dimension, and the environmental and governance dimension, the score is calculated as follows:


  1. Financial reports of companies: The researcher relied on the financial reports published in the Iraqi Stock Exchange related to the study sample to reach the data for the earnings quality variable. The researcher relied on the modified Jones 1995 model to arrive at the earnings quality according to the stages below:



TAi, t: Total accruals of firm i during year t

NIOi, t: Net operating profits of company i during year t

CFOi, t: Net cash flows from operating activities of company i during year t

NDAіt: Non-discretionary accruals of company i during year t

Aіt-1: The company’s total assets during the past year t-1

ΔREVіt: The rate of change in revenues (sales) between the current year t and the previous year t-1

PPEіt: Total fixed assets for year t

ɛіt: random error, represents the remaining portion of total accruals that is not explained by the regression model and is used as an indicator of discretionary accruals (DA)


Descriptive analysis

In this part, we will discuss a descriptive analysis of the study variables, and the table 3 below shows a detailed description of the variables in our study:

Conclusion and recommendations:
Recommended Articles
Research Article
Empirical study of the Factors and Challenges Affecting Home Based Business Units in Nizwa, Sultanate of Oman
Download PDF
Research Article
The Role of Islamic Banking Industry in Indonesia's Economic Growth
Download PDF
Research Article
The Influence of Motivation, Leadership, and Training on the Performance of Pt. Indonesia Comnets Plus (Icon+) East Java Regional
Download PDF
Research Article
Strategic Direction of Local Content Policy and Foreign Direct Investment: Evidence of Nigeria (1980-2020)
Download PDF
Flowbite Logo
PO Box 101, Nakuru

Editorial Office:
J.L Bhavan, Near Radison Blu Hotel,
Jalukbari, Guwahati-India
Useful Links
Order Hard Copy
Privacy policy
Terms and Conditions
Refund Policy
About Us
Contact Us
Online Payments
Join as Editor
Join as Reviewer
Subscribe to our Newsletter
Follow us
Copyright © iARCON Internaltional LLP . All Rights Reserved.