The Relationship between the Disclosure Level of Integrated Reporting and Firm’s Value- an Empirical Study on Companies Listed in the Egyptian Stock Exchange

This study aims to examine and analyze the impact of integrated reporting disclosure on the cost of capital, while investigating the mediating role of information asymmetry. The analysis is based on a sample of non-financial companies listed on the Egyptian Stock Exchange during the period from 2018 to 2023.
The regression analysis results indicate a statistically significant positive relationship between the level of integrated reporting disclosure (IRSCORE) and the cost of capital (WACC), suggesting that increased disclosure is associated with a higher cost of capital. Additionally, the relationship between disclosure and information asymmetry (IA) was found to be negative but statistically insignificant, implying a weak effect of disclosure in reducing information asymmetry between management and investors.
When both disclosure and information asymmetry were included in a multiple regression model explaining the cost of capital, the direct effect of disclosure on the cost of capital remained strong and significant. At the same time, a significant negative effect of information asymmetry on the cost of capital was observed. These findings indicate that information asymmetry does not serve as a full mediating variable in the relationship between integrated reporting disclosure and the cost of capital, as the direct influence of disclosure persists even after accounting for the mediating variable.
The study highlights the importance of other influencing factors, such as firm size, industry sector, quality of governance, and operational transparency. This suggests that while integrated reporting disclosure is important, it is not sufficient on its own to significantly reduce information asymmetry or lower the cost of capital without a supportive institutional and regulatory environment.