THE IMPORTANCE OF FORMULATING A UNIFORM STRUCTURE FOR NON-FINANCIAL REPORTING: A quantitative study based on the evidence from the automotive industry.

Sammanfattning: Nowadays, sustainability has become a well-known and popular topic which has drawn the attention of many people worldwide. To fulfill their responsibility towards sustainability, the business world is shifting from an accounting-based accountability to an accountability-based accounting. Every renowned organization publishes their non- financial report, but quality of these reports is questionable. For the lack of a uniform structure, non-financial reports have become too complicated for some of the stakeholders to understand. To make things worse, the business entities publish non- financial reports highlighting their positive impacts but hide the negative aspects. However, these issues could not resist the interest of the stakeholders, rather they observe different independent index providers to know about the sustainability. We know non- financial reporting is not about figures rather it is about disclosures. However, it is very difficult to collect information from a non-financial report and compare them among industry peers. Therefore, we intend to examine if it is important to formulate a unique structure for the non-financial reporting.Though non-financial reporting is very different from financial reporting, it is very difficult for the readers to get the real picture of sustainability of any organization. The quality measurement of non-financial reports is a daunting task. To get a clear picture we collected the non-financial information of 12 automobile manufacturing groups from different geographical locations. We also observed 5 annual reports for each company and formulated our own index and conducted a quantitative study to answer our research question.We collected data from non-financial reports of our selected automobile companies to formulate our own index and collected index of these companies from the website of S&P Global. From the non-financial report, we also collected data about the length of the report, number of years compared for performance indicators, and if the report is audited or not. We collected the data about total asset of these companies and their return on asset.With the help of our theoretical framework where we discussed about CSR, stockholder theory, and legitimacy theory and formulated two hypotheses. To answer these hypotheses, we run a regression test to see if the variables used in our study have any predictable relationship or not. Hence we tested our data and concluded that it is important to formulate a unique structure for non-financial reporting.Non-financial reporting has come a long way since its appearance but to go even further and to fulfill the demand of the stakeholders, publishing such reports is not enough. Companies who publish such reports also need to ensure the quality and comparability. Though different organizations have different sustainability challenges, at least non- financial reports of a particular industry should follow a certain structure so that these reports can be compared.