Non-Financial Reporting, Disclosure of Non-Financial Information and its determinants: the Italian experience

On 30th December 2016, Non-Financial Reporting requirements were implemented in the Italian context with the Legislative Decree no. 254/2016. The latter entered into force on 25th January 2017, but its effects and provisions were effective for companies starting from the fiscal year 2017. This act resulted from the transposition of Directive 2014/95/EU. The Decree obliges large companies to draw up a report on non-financial information that is by the Law called in Italy “Non-Financial Statement”. The Decree regulates the methods and information that must be provided to stakeholders, disclosing Non-Financial Information on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. In this study, we will focus only on certain non-financial information concerning social and environmental aspects, notwithstanding the presence of much other information. The data were collected from Non-Financial Statements of Italian listed companies, obtained from a capillary search of the individual documents on the websites of the companies. In this study we have used a disclosure index, a particular approach of content analysis to determine the level of Non-Financial Information disclosed by companies. In order to create the evaluation categories, we have analysed the requirements of the Legislative Decree and the European Directive. Afterwards, we have investigated the current disclosure of Non-Financial Information in companies listed on the Italian Stock Exchange and their compliance with the requirements. Finally, with a multiple linear regression model, we have investigated whether some determinants could influence the Corporate Social Responsibility (CSR) disclosure in the Non-Financial Statement of Italian companies. These determinants include the following: company size, profitability, industry environmental sensitivity, board size, women on board and the presence of the sustainability committee. The results indicate that the board size and the presence of the sustainability committee are positively associated with the level of Non-Financial Information Disclosure. The research has generated as an output the disclosure index and, as an approach of content analysis, it could include subjectivity. The results should not be generalised because the sample is based on a list of Italian listed companies for 2017. The study contributes to the comprehension of determinants of Non-Financial Information Disclosure and provides findings which can be useful both for theory and practice.