The Effect of Corporate Governance on the Quality of Integrated Reporting and ESG Risk Ratings

Abstract

Integrated Reporting (IR) has gained prominence as a comprehensive approach to corporate disclosure yet theoretical clarity is still developing regarding how governance mechanisms shape IR quality and its relation to ESG risk ratings. Addressing this gap this study explores the influence of board and audit committee characteristics on IR quality and whether an improved IR quality is associated with a lower ESG risk. Drawing on different theories this research examines how governance structures enhance transparency and accountability in line with societal expectations. Based on panel data from 158 firms across four years (2019–2022) a random effects Panel EGLS regression model is employed along with an endogeneity check. Findings show that board independence and the presence of women members significantly enhance the IR quality while board size is not a determining factor. Similarly audit committee independence and meeting frequency positively influence the IR quality whereas committee size does not. Furthermore firms with a higher IR quality demonstrate significantly lower ESG risk scores. These results underscore the theoretical proposition that effective governance improves disclosure credibility and reduces information asymmetry. This study suggests that reinforcing board independence and diversity can enhance reporting quality and stakeholder trust offering a strategic path toward more sustainable and transparent corporate behavior. © 2025 Elsevier B.V. All rights reserved.