Copy of Declaration (1)

INTEGRATED REPORTING:AN EMPIRICAL ANALYSIS

A dissertation submitted to the University of Delhi in partial fulfillment of the requirements

for the degree of

MASTER OF PHILOSOPHYIN

COMMERCEM.Phil Batch XXXIV

Accounting Area

BYPooja Dhingra

Under the supervision ofDr. Ajay Kr. Singh

DEPARTMENT OF COMMERCE UNIVERSITY OF

DELHI DELHI 110007INDIA

2014

DEPARTMENT OF COMMERCE

DELHI SCHOOL OF ECONOMICS

UNIVERSITY OF DELHI

DELHI-110007

DECLARATION

I hereby declare that the dissertation titled “Investment development

theory:“Testing the applicability in the Indian context” , is an original research

work done by me and any part or whole of the dissertation is not submitted to any

University or authority for award of any degree or diploma. The dissertation

submitted in partial fulfillment of the requirements for the award of degree of

M.Phil., is an original piece of work and the indebtedness to all other sources has

been duly acknowledged.

Arushi Malhotra (Candidate)

Dr. Niti Bhasin( Supervisor)

Professor J.P. SharmaHead, Department of Commerce

Faculty of Commerce & BusinessDelhi School of Economics

University of DelhiDelhi-110007

ACKNOWLEDGEMENT

Firstly, I would like to thank my

Mentor Dr. Niti Bhasin for

being such a wonderful

supervisor, I feel deeply blessed

to have a guide like her, who

encouraged me a lot to do better

in my research endeavor. She,

despite her several pre-

occupation, was always ready to

give her valuable suggestions.

I would also like to thank Prof.

J.P. Sharma, Head, Department

of Commerce, Faculty of

Commerce and Business,

University of Delhi, for having

given me this opportunity and

making resources available, for

carrying out my research work

in efficient manner. My sincere

thanks also go to Dr. Suresh

Aggarwal, Professor,

Department of Business

Economics, South Campus,

Delhi, for teaching in the

coursework. I would like to

express my gratitude to

Prof.K.V. Bhanu Murthy,

Prof.A.K. singh, Prof. Kavita

Sharma, Department of

Commerce, Faculty of

Commerce and Business,

University of Delhi, for their

able guidance and advice.

I owe special gratitude to Dr. JK Thukral for his guidance and constant encouragement for the present work. Special thanks to Dr. Ashok Sehgal, Principal, Shri Ram College of Commerce, University of Delhi, for providing me the resources and the required support to carry out my research work smoothly.

I am also thankful to the librarian, Ratan Tata Library and Shri Ram College of Commerce for co-operating in procuring the necessary research materials.

I am grateful to my parents for their consistent support .last but not the least thanks to the almighty God for helping me in moment of struggle.

Arushi Malhotra

iv

TABLE OF CONTENTS

List of Tables

List of Figures and Graphs

List of Abbreviations

CHAPTER-1: INTRODUCTION

1.1 Introduction

1.2 Scope of the Work

1.3 Relevance of Study

1.4 Research Problem

1.5 Research questions

1.6 Research Objectives

1.7 Hypotheses of the study

1.8 Research methodology

1.9 Assumptions and delimitation

1.10 Limitations of the study

1.11 Chapter overview

Chapter Scheme

CHAPTER-2: CONCEPTUAL FRAMEWORK

2.1 Integrated Reporting: A Journey

2.2 Financial Reporting

2.3 Evolution beyond financial reporting

2.4 The concept of sustainability, sustainable development andSustainability Reporting

2.5 Growth of Reporting in India (during last 2 decades)

2.5.1 Global Reporting Initiative

v

2.5.2 Transition to IFRS 22

2.5.3 The new initiatives 22

2.5.4 MCA mandated XBRL for specific companies 22

2.5.5 SEBI’s mandate to insert Business Responsibility Report 23

2.5.6 The new Companies Act 2013 and CSR spending, Woman participation on Board 24

2.5.7 Towards Integrated Reporting 25

2.6 Limitations of Current Financial Reporting leading to Emergence of Integrated Reporting 27

2.6.1 Difficulties in Reporting of Sustainability Issues (DSI) 27

2.6.2 Distrust for Corporate Actions (DCA) 28

2.6.3 Failure of Financial Reporting To Provide A Complete Picture (FFR) 29

2.6.4 Need For Incorporation of ESG Issues (ESG) 30

2.7 Disclosures sought in new form of reporting 30

2.7.1 System Effectiveness & Process Effectiveness (SYSEFF) 30

2.7.2 Economic, Social and Environmental Impact (SOCENV) 31

2.7.3 Ethical Governance (EGOV) 31

2.8 Perceived Advantages or consequences of adoption of Integrated Reporting 32

2.8.1 Ecological Footprints of Operations and Innovations (ECOOP) 32

2.8.2 Stakeholder Engagement (STENG) 33

2.8.3 Staff Engagement (SENG) 34

2.8.4 Competitive Image (IMG) 34

CHAPTER-3: REVIEW OF LITERATURE 36-48

3.1 Introduction 36

3.2 Corporate Reporting and Communication 36

3.3 Non-financial Reporting (CSR) 37

vi

3.4 Environmental Reporting 38

3.5 Sustainability Reporting 41

3.6 Integrated Reporting

CHAPTER-4: XBRL-CONCEPTUAL FRAMEWORK &

LITERATURE REVIEW 49-57

4.1 XBRL as platform for communication of Integrated Reporting 49

4.2 Conceptual Framework of XBRL 49

4.3 Definition 51

4.4 XBRL vis-à-vis EDI 51

4.5 BENEFITS OF XBRL 55

4.6 Literature Review 56

CHAPTER-5: RESEARCH DESIGN 58-73

5.1 Study Description 58

5.2 Devising the Study’s Core Rationales 58

5.3 Study Outline 60

5.4 Questionnaire Based Response Administration 60

5.5 Assumptions 62

5.6 Pre testing and Pilot Study 63

5.7 Population 64

5.8 Sample 65

5.9 Data Collection Method 66

5.10 Sampling Method 66

5.11 Sample Size Requirements 67

5.12 Data Analysis 68

5.13 Scale Development: Antecedents 69

vii

5.13.1 Difficulties In Reporting Of Sustainability Issues (DSI) 69

5.13.2 Distrust for Corporate Actions (DCA) 69

5.13.3 Failure of Financial Reporting To Provide A CompletePicture (FFR) 70

5.13.4 Lack of Integration of ESG Issues (ESG) 70

5.14 Test Sequence: Antecedents 70

5.14.1 Disclosures sought in new form of reporting 70

5.14.2 System Effectiveness (SYSEFF) 71

5.14.3 Social and Environmental Impact (SOCENV) 71

5.14.4 Ecological Footprints of Operations and Innovations(ECOOP) 71

5.15 Test Consequences 72

5.15.1 Stakeholder Engagement (STENG) 72

5.15.2 Staff Engagement (SENG) 72

5.15.3 Competitive Advantage (IMG) 72

5.16 Scale testing : Constructs and their Reliability 72

CHAPTER- 6: EMPIRICAL ANLYSIS AND FINDINGS 74-137

6.1 Developing the Integrated Reporting Survey 74

6.2 Item Generation 75

6.3 Data analysis and Findings 77

6.3.1 Initial Item Reduction- Exploratory Factor Analysis 77

6.3.2 Exploratory Factor Analysis: Key Driver Identification 78

6.3.3 The Drivers Scale 79

6.3.4 Extraction based on number of factors 79

6.4 Results of Factor Analysis 80

6.5 Reliability 82

6.6 Validation of Factor Analysis 82

viii

6.7 Confirmatory Factor Analysis (CFA) 83

6.8 Statistical Significance of parameter estimate 89

6.9 Goodness of fit indices 91

6.10 Information to be sought in the new form of reporting 93


6.12 Perceived advantages of Integrated Reporting 100


6.14 Structural Equation Modelling (SEM) 110

6.15 Modification Indices 117

6.16 Significance Test 118

6.17 Assessing the Structural Model Validity 118

6.18 Specifying the Structural Model 121

6.19 Addressing the Hypotheses 123

6.20 Analysis Based on Demographic Variables 125

6.21 Data Analysis and Findings 126

CHAPTER-7: SUMMARY FINDINGS, DISCUSSIONS,

CONCLUSIONS AND RECOMMENDATIONS 138-142

7.1 The key findings of this research were: 138

7.2 Significance of the study 139

7.2.1 At the Organizational Level 139

7.2.2 At the National Level 140

7. 3 Recommendations for fostering the awareness on XBRL 141

7.4 Areas for further research 141

REFERENCES 143-153

AP PENDIX a-l

ix

LIST OF TABLES

Table No. Title

1.1: Alternative routes of servicing markets

3.1: Top Investing countries in India 1991-2000

3.2: Country- wise FDI inflows 2000-2015

3.3: Sector-wise FDI inflows 1991-2000 (in %)

3.4: Technical and Financial collaboration 1991-1999

3.5: Top 10 States for FDI inflows 2000-2014

3.6: The structure of Indian Ownership participation (1975-90)3.7The structure of Indian ownership participation 1991-2001

3.8 Sector-wise trends of OFDI from 2003-2012

3.9 Year-wise position of actual outflows in respect of outward FDI & guarantees issued ( USD million)

3.10 Number of proposals under approval and automatic route

4.1 Regression results of the Indian IDP

4.2 IFDI stock, OFDI stock and GDP of India in 1991-2013 ( USD million)

4.3 GDP and NOI position in 1991-2013

4.4 Outward FDI Performance

Index4.5 Ease of doing business Index of BRICS nations

4.6BRICS nation’s performance in Innovation, technological readiness, higher education & training on a scale of 7

136

xii

LIST OF FIGURES AND GRAPHS

Figure No. Title Page No.1.1: Graphical presentation of stages of IDP 19

1.2: Strength of O- advantages at different IDP- stages 26

3.1: Sector-wise FDI inflows during 2000-2014 36

3.2: FDI inflows during 1991-2013 (USD million)50

3.3: Sector-wise OFDI during 1975-1990 53

3.4: Country-wise Distribution of OFDI flows from 1975-1990 54

3.5: Sector-wise OFDI during 1991-2001 603.6:Ccountry-wise distribution of OFDI flows during 1991-2001 76

3.7: Sector-wise OFDI(2003-04) 88

3.8: Sector-wise OFDI(2003-12) 97

3.9: Outward FDI Flows ( USD million) 105

3.10: Country-wise distribution of OFDI flows 2001-02 112

3.11: Country-wise distribution of outward FDI from 2003-2012 113

3.12: Top Destinations for OFDI during 2013( amount in USD million) 116

4.1 Stock of IFDI and OFDI (USD million)

4.2 Net outward Investment Position of India (1991-2013) inUSD million

4.3 NOI/GDP per capita (1991-2013)

xiv

LIST OF ABBREVIATIONS

IFDI Inward Foreign Direct Investment

OFDI Outward Foreign Direct Investment

GDP Gross Domestic Product

NOIP Net Outward Investment Position

NOI Net Outward Investment

M&As Mergers and Acquisitions

FDI Foreign Direct Investment

OECD Organisation for Economic Co-operation and Development

UNCTAD United Nations Conference on Trade and Development

DIPP Department of Industrial Policy & Promotion

RBI Reserve Bank of India

IMF International Monetary Fund

CAGR Compound Annual Growth Rate

O Ownership

L Location

I Internalization

R&D Research and Development

OFDIPI Outward FDI Performance Index

DTAA Double Taxation Avoidance Agreements

FEMA Foreign Exchange Management Act

FERA Foreign Exchange Regulation Act

IDP Investment Development Path

TWMNC Third World Multinational Companies

LLL Linkage, Leverage and Learn

OLI Ownership, location and internalization

SEZ Special economic zones

US United States

WIR World Investment Report

xv

MNEs Multinational Enterprises

EMEs Emerging Market Economies

JVs Joint ventures

WOS Wholly owned subsidiaries

IJVs International joint ventures

SAARC South Asian Association for Regional Co-operation

PSUs Public sector undertakings

ADRs/GDRs American depository receipts/ Global depository receipts

S&E Science and Engineering

TNC Transnational corporations

BRICS Brazil, Russia, India , China & South Africa

UNESCOThe United Nations Educational, Scientific and Cultural Organization

IAMAI Internet & Mobile Association of India

NSF National Science Foundation

IIT Indian Institute of Technology

NISTADS National Institute of Science, Technology and Development Studies

CIS Commonwealth Independent States

IT Information Technology

MNCs Multinational Corporations

AAGR Annual average growth rate

UKUnited Kingdom

OEMs Original Equipment Manufacturers

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