|KOKUBU Katsuhiko (Kobe University) /SAKAUE Manabu (Hosei University) /KOGA Chitoshi (Faculty Fellow, RIETI / Doshisha University) /KONISHI Noriyuki (Aoyama Gakuin University)/HISAMOCHI Eiji (Surugadai University)/YAO Jun (Japan Society for the Promotion of Science / Research Assistant, RIETI)/SHIMADA Yoshinori (Kobe University)
|March 2011 11-J-014
|Research Project on the Design for the Optimum Disclosure System
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For quite some time there has been a debate surrounding the issue requiring companies to disclose not only financial information but also non-financial information, as shown in recent efforts for enhanced business reporting (EBR). This discussion paper explores non-financial information in three aspects: social and environmental information, intellectual capital information, and risk information, and it also examines the extent and reasons for the disclosure of non-financial information. In addition, the question about the media is also discussed with consideration to the trend for integrated reporting and XBRL. Ultimately, non-financial information should fuse with financial information and evolve to become integrated reporting. XBRL can only realize its potential if both non-financial information and financial information are integrated. However, there are many obstacles for realizing integrated reporting at one time. Therefore, to stimulate a change in investor behavior and company behavior, as argued by some international organizations such as IIFC, there is an urgent demand for extended reporting that integrates information on sustainability and information on intellectual capital as a source of company competitive advantage. For such non-financial information, there is a necessity to discuss questions related to an expansion in management's disclosure responsibility, as well as the corresponding judgment in auditing. There is also a necessity to discuss questions concerning how to reduce the cost of auditing and how to construct an assurance system that helps to improve the reliability of information and to limit the overextension of non-financial information.