The Mediating Role of the Firm Image in the Relationship Between Integrated Reporting and Firm Value in GCC Countries
Abstract
1. Introduction
- RQ 1: What is the impact of integrated reporting on firm value for companies listed on GCC stock exchanges?
- RQ 2: How does firm image mediate the relationship between integrated reporting and firm value for companies listed on GCC stock exchanges?
- RO 1: To examine how integrated reporting affects firm value for companies listed on GCC stock exchanges, taking into account all companies that regularly publish integrated reports.
- RO 2: To investigate the mediating function of the firm image in the relationship between integrated reporting and firm value for companies listed on GCC stock exchanges and to determine if firms with a better image encounter favourable effects on such a relationship.
2. Theoretical Foundation
2.1. Stakeholder Theory
2.2. Legitimacy Theory
2.3. Signalling Theory
3. Literature Review and Hypotheses Development
3.1. Integrated Reporting and Firm Value
3.2. Mediating Role of Firm Image
4. Data and Methodology
4.1. Source of Data, Study Period, and Sample Size
4.2. Measurements of the Variables
4.2.1. Dependent Variable
4.2.2. Independent Variable
4.2.3. Mediating Variable
4.2.4. Control Variables
Variable Name | Type | Measurement Method | Data Source |
Firm Value (FV) | Dependent | Tobin’s Q | Company Reports |
Integrated Reporting (IR) | Independent | Content analysis based on IIRF | Company Reports |
Firm Image (FI) | Mediating | Binary proxy (award recognition) | Company Reports |
Control Variables | Control | Firm size (log of assets), leverage, GDP | Company Reports and GDP from the World Economic Forum’s Global Competitive Reports |
4.3. Empirical Model
5. Empirical Results and Discussion
5.1. Descriptive Statistics
5.2. Correlation Matrix
5.3. Results and Discussion
5.3.1. Robustness Check
5.3.2. Implications of the Study
Theoretical Implication
Implications for Corporate Managers
Practical Implications for Policy Makers
6. Concluding Remarks
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
Appendix A
Disclosure Items |
|
OE1 The nature of the organisation’s work and the circumstances in which it operates |
OE2 Mission and vision of the organisation. |
OE3 Culture, morals, and values. |
OE4 Ownership and operating structure. |
OE5 Competitive environment of the organisation. |
OE6 The most important factors influencing the external environment |
OE7 Needs of stakeholders. |
OE8 Economic conditions in which the organisation operates. |
OE9 Market forces. |
OE10 Impact of technological changes. |
OE11 Demographic and societal issues. |
OE12 Environmental challenges faced by the organisation |
OE13 The legislative and regulatory environment in which the organisation operates. |
OE14 The political situation in the countries in which the organisation operates. |
|
GO1 Disclose how the governance structure contributes to creating value for the organisation. |
GO2 Disclose the characteristics of the organisation’s leadership structure. |
GO3 The processes on which the organisation builds its strategic decisions and organisational culture. |
GO4 Procedures for the impact and monitoring of strategic direction of the organisation. |
GO5 The reflection of organisational culture, its values and ethics in its use and its impact on capital. |
GO6 Promote and encourage innovation by governance officials. |
GO7 Whether the organisation is implementing governance practices that exceed legal requirements |
GO8 Relationship of wages and incentives provided to create value for the organisation. |
|
BM1 A diagram showing the main elements of the organisation. |
BM2 Identify the basic elements of the business model. |
BM3 Show how the key inputs relate to the capitals on which the organisation depends. |
BM4 Disclose inputs that contribute to creating value for the organisation. |
BM5 The extent to which the organisation is distinguished in the market (e.g., product differentiation, market segmentation, marketing). |
BM6 The degree of adoption of the business model on revenue generation. |
BM7 The extent to which the business model adapts to changes. |
BM8 Approach to innovation. |
BM9 Organisation initiatives such as (staff training, process improvement). |
BM10 Organisation outputs of products, services, and by-products such as waste and emission of gases. |
BM11 Internal results such as organisational reputation, job loyalty, income, and cash flow. |
BM12 External results such as (customer satisfaction, tax payment, brand loyalty, social and environmental impacts). |
BM13 Positive results lead to maximising capital and creating value. |
BM14 Negative results leading to capital reduction and lack of value. |
|
RO1 Disclose the risks that affect the organisation’s ability to create value. |
RO2 Sources of risk, whether internal or external. |
RO3 Procedures taken to address the risks to which the organisation is exposed. |
|
SR1 Strategic objectives of the organisation. |
SR2 The organisation’s current strategies or intends to implement. |
SR3 Resources allocated for the implementation of the strategy. |
SR4 Measure achievements and goals. |
SR5 Factors influencing the granting of a competitive advantage to the organisation (innovation, intellectual capital exploitation, evolution of the organisation and social and environmental considerations). |
|
PE1 Quantitative indicators related to objectives, opportunities and risks. |
PE2 The positive and negative effects of the organisation on capital. |
PE3 Organisation’s response to stakeholder needs. |
PE4 Linking previous and current performance. |
PE5 Key performance indicators that combine financial measures and other components. |
|
OL1 Outlook of the organisation about the external environment. |
OL2 Impact of the external environment on the organisation. |
OL3 Organisation’s preparedness to respond to challenges that could occur. |
OL4 The impact of the external environment, risks and opportunities on achieving the organisation’s strategic objectives. |
OL5 The availability of financial and natural resources that support the institution’s ability to create value in the future. |
OL6 Disclosure of the organisation’s expectations in accordance with regulatory or legal requirements. |
|
BP1 Summary of the process of determining the material importance of the organisation (such as determining the role of those responsible for governance and staff who prioritize of material matters). |
BP2 A description of the reporting boundary and how it has been determined. |
BP3 Summary of the significant frameworks and methods used to quantify or evaluate material matters included in the report (e.g., the applicable financial reporting standards used for compiling financial information, a company-defined formula for measuring customer satisfaction, or an industry-based framework for evaluating risks). |
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Variables | Min. | Max. | Mean | Std. Dev. | Skew. | Kurto. |
---|---|---|---|---|---|---|
IR | 0.090 | 0.900 | 0.485 | 0.161 | 0.156 | −0.940 |
DE | 0.000 | 5.000 | 0.578 | 0.791 | 0.897 | 1.257 |
FS | 0.460 | 13.390 | 6.915 | 2.112 | 0.508 | 0.170 |
GDP | 3.540 | 7.010 | 5.506 | 1.002 | −0.178 | −1.079 |
IND | 0.032 | 0.425 | 0.333 | 0.077 | 0.093 | 1.896 |
GD | 0.000 | 28.570 | 7.998 | 2.284 | 0.390 | 0.213 |
FI | 0.000 | 1.000 | 0.350 | 0.479 | 0.607 | −1.635 |
TQ | 0.010 | 18.780 | 1.530 | 2.446 | 1.062 | 1.993 |
Variables | VIF | IR | DE | TQ | FS | GDP | IND | GD | FI |
---|---|---|---|---|---|---|---|---|---|
IR | 1.13 | 1 | |||||||
DE | 1.2 | 0.16 ** | 1 | ||||||
TQ | 0.11 | 0.01 | −0.07 | 1 | |||||
FS | 3.56 | 0.01 | 0.26 ** | 0.21 ** | 1 | ||||
GDP | 1.59 | 0.02 | 0.08 ** | 0.13 | 0.26 ** | 1 | |||
IND | 1.21 | 0.01 | −0.08 ** | 0.01 | −0.06 * | 0.19 ** | 1 | ||
GD | 1.17 | 0.062 * | −0.04 | 0.04 | 0.09 ** | −0.05 | 0.25 ** | 1 | |
FI | 3.24 | 0.06 | 0.08 * | 0 | 0.08 * | 0.15 ** | 0.05 | −0.10 ** | 1 |
Variables | Model 1 | Model 2 | Model 3 | ||||||
Dependent Variable: (TQ) | Dependent Variable: (FI) | Dependent Variable: (TQ) | |||||||
Coeff. | Std. Error | Z-Stats. | Coeff. | Std. Error | Z-Stats. | Coeff. | Std. Error | Z-Stats. | |
Const. | 7.526 | 2.065 | 3.644 *** | −0.844 | 0.304 | −2.780 *** | 9.354 | 0.925 | 10.113 *** |
FI | - | - | - | - | - | - | 0.212 [β′2] | 0.103 | 2.058 ** |
IR | 1.321 [β1] | 0.529 | 2.496 ** | 0.215 [α1] | 0.130 | 1.660 * | 1.220 [β′1] | 0.371 | 3.288 *** |
FS | 1.004 | 0.302 | 3.324 *** | 0.042 | 0.024 | 1.710 * | 1.174 | 0.104 | 11.300 *** |
DE | −0.135 | 0.138 | −0.983 | 0.038 | 0.065 | 0.580 | −0.135 | 0.092 | −1.471 |
IND | 1.205 | 1.576 | 0.765 | 1.609 | 0.660 | 2.440 ** | 1.772 | 1.437 | 1.233 |
GD | 0.023 | 0.046 | 0.490 | −0.011 | 0.010 | −1.110 | 0.047 | 0.039 | 1.205 |
GDP | 0.063 | 0.053 | 1.182 | 0.069 | 0.061 | 1.130 | 0.484 | 0.314 | 1.540 |
Lag_TQ | 0.276 | 0.092 | 2.997 *** | - | - | - | 0.276 | 0.092 | 2.997 *** |
Lag_FI | - | - | - | −0.058 | 0.037 | −1.570 | - | - | - |
Sargan test: (p-value) | 0.234 | 0.338 | 0.213 | ||||||
Hansen test: (p-value) | 0.111 | 0.154 | 0.220 | ||||||
AR (1): | 0.130 | 0.187 | 0.120 | ||||||
AR (2): | 0.195 | 0.139 | 0.264 | ||||||
Wald (ϰ2) | 0.000 | 0.000 | 0.000 | ||||||
Mediation Effect based on the Outcome of Models 1, 2 and 3 | |||||||||
Coefficients are significant | β1 = 1.321 **; α1 = 0.215 *; β′2 = 0.212 **; β′1 = 1.220 *** | ||||||||
Sobel test | No Sobel test is required. | ||||||||
Mediation Effect | Partial |
Variables | Model 1 | Model 2 | Model 3 | ||||||
Dependent Variable: (TQ) | Dependent Variable: (FI) | Dependent Variable: (TQ) | |||||||
Coeff. | Robust Std. Error | Z-Stats. | Coeff. | Std. Error | Z-Stats. | Coeff. | Robust Std. Error | Z-Stats. | |
Const. | −0.379 | 0.225 | −1.686 * | −0.160 | 0.235 | −0.681 | 0.334 | 0.225 | 1.486 |
FI | - | - | - | - | - | - | 0.050 [β′2] | 0.020 | 2.520 ** |
IR | 0.757 [β1] | 0.106 | 7.155 *** | 0.492 [α1] | 0.101 | 4.89 *** | 0.463 [β′1] | 0.084 | 5.500 *** |
FS | 0.117 | 0.031 | 3.769 *** | 0.021 | 0.009 | 2.431 ** | 0.173 | 0.037 | 4.675 *** |
DE | 0.019 | 0.028 | 0.675 | 0.075 | 0.051 | 1.470 | 0.119 | 0.078 | 1.525 |
IND | 0.083 | 0.283 | 0.295 | 0.460 | 0.447 | 1.031 | 0.100 | 0.260 | 0.387 |
GD | 0.021 | 0.009 | 2.432 ** | −0.013 | 0.011 | −1.169 | 0.024 | 0.009 | 2.538 ** |
GDP | 0.161 | 0.115 | 1.395 | 0.133 | 0.092 | 1.446 | 0.067 | 0.049 | 1.367 |
Lag_TQ | 0.351 | 0.110 | 3.190 *** | - | - | - | 0.351 | 0.069 | 5.076 *** |
Lag_FI | - | - | - | 0.064 | 0.049 | 1.306 | - | - | - |
R2 Overall | 0.250 | 0.1630 | 0.254 | ||||||
F-stats. | 16.74 *** | 22.788 *** | 24.765 *** | ||||||
B-P test (ϰ2) | 203.967 *** | 186.78 *** | 198.324 *** | ||||||
Hausman test (ϰ2) | 131.728 *** | 148.559 *** | 138.226 *** | ||||||
DWH test of endogeneity: | |||||||||
Durbin (ϰ2) | 1.762 (p = 0.172) | 1.567 (p = 0.2153) | 1.546 (p = 0.1257) | ||||||
Wu-Hausman (F-stats.) | 1.812 (p = 0.1821) | 2.814 (p = 0.1484) | 1.683 (p = 0.1345) | ||||||
Mediation effect based on the outcome of Models 1, 2 and 3 | |||||||||
Coefficients are significant | β1 = 0.757 ***; α1 = 0.492 ***; β′2 = 0.050 **; β′1 = 0.463 *** | ||||||||
Sobel test | No Sobel test is required. | ||||||||
Mediation effect | Partial |
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Alatawi, M.S.; Daud, Z.M.; Johari, J. The Mediating Role of the Firm Image in the Relationship Between Integrated Reporting and Firm Value in GCC Countries. J. Risk Financial Manag. 2025, 18, 438. https://doi.org/10.3390/jrfm18080438
Alatawi MS, Daud ZM, Johari J. The Mediating Role of the Firm Image in the Relationship Between Integrated Reporting and Firm Value in GCC Countries. Journal of Risk and Financial Management. 2025; 18(8):438. https://doi.org/10.3390/jrfm18080438
Chicago/Turabian StyleAlatawi, Mohammed Saleem, Zaidi Mat Daud, and Jalila Johari. 2025. "The Mediating Role of the Firm Image in the Relationship Between Integrated Reporting and Firm Value in GCC Countries" Journal of Risk and Financial Management 18, no. 8: 438. https://doi.org/10.3390/jrfm18080438
APA StyleAlatawi, M. S., Daud, Z. M., & Johari, J. (2025). The Mediating Role of the Firm Image in the Relationship Between Integrated Reporting and Firm Value in GCC Countries. Journal of Risk and Financial Management, 18(8), 438. https://doi.org/10.3390/jrfm18080438