Value Creation Reporting: Answering the Question „Value to Whom” according to the International Integrated Reporting Framework
Value Creation Reporting: Answering the Question „Value to Whom” according to the International Integrated Reporting Framework

Summary/Abstract: The principal function of integrated reporting is the reporting of value and this phenomenon seems the most philosophical part of the International <IR> Framework. This paper discusses what the value concept refers to in the Framework: Value to investors, value to society or value to present and future generations? In this sense, we try to answer this question by highlighting the dynamics of capital formations according to interrelations between capitals and demonstrating the value creation process in the short, medium, and longer term. We show that (1) „profit” is the result of short term value creation, which indicates the „value to value chain stakeholders”, (2) „expected fair value of equity” represents the „value to investors” and (3) „longer term value” represents the „value to society” according to the International <IR> Framework. Additionally, we touch on the inadequacies of the current Framework and suggest future research opportunities within the scope of value creation reporting. To our knowledge, this study is the first to provide a detailed framework on the dynamics of capitals usage and it attempts to show the intersection of accounting and finance in terms of value creation reporting.

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