Consequences of Non-Financial Reporting Directive in Poland

This monograph is an attempt to contribute to the new but currently dynamically developing direction of basic research in the discipline of “economics and finance” concerning non-financial reporting. The novelty of this publication lies in the following: (1) it disentangles the quantity of non-financial disclosure into five thematic aspects (environment, employees, human rights, anti-corruption and community involvement) and six content items (business model, non-financial KPIs, policies — including due diligence processes implemented and outcomes of these policies, principal risks and managing these risks) and develops individual nonfinancial indices in the cross-section of these dimensions, taking into account the requirements of the Directive 2014/95/EU; (2) it focuses on the rarely examined specific subsets of non-financial reporting, for example, anti-corruption, human rights, community involvement and risk-related disclosure; (3) it disaggregates the quality of non-financial disclosure into materiality and reliability and develops self-constructed indices applying the non-financial reporting regime introduced by the Directive and EU Guidelines; (4) it is the first study to test the effectiveness of the Directive, comprehensively taking into account the quantity and quality of disclosures over such a long period of time — three years before and three years after the implementation of the Directive; (5) it explores the relevant determinants of non-financial disclosure, including company characteristics (size, profitability, leverage, industry), corporate governance measures (state ownership, foreign ownership, CSR committee), primary stakeholders (investors, creditors, consumers and employees), secondary stakeholders (environment, regulators, standard setters, e.g., GRI and NFIS), experience in sustainability, stand-alone sustainability reports, external assurance, international presence, public expectations, participation in the UN Global Compact as well as inclusion in the Respect Index.

Introduction
Chapter 1. Disclosure of business model and non-financial Key Performance Indicators: The context of NFRD  
1.1. Introduction and research questions
1.2. Institutional background and literature review
1.3. Research methodology
1.4. Empirical results and discussion
1.5. Conclusions, limitations and future research agenda
Chapter 2. Disclosure of non-financial policies and their outcomes: The determi­nants and impact of NFRD
2.1. Introduction and research questions
2.2. Institutional background and previous literature
2.3. Research methodology
2.4. Empirical results and discussion
2.5. Conclusions, limitations and future research agenda
Chapter 3. Disclosure of non-financial risks and their management: The determi­nants and impact of NFRD
3.1. Introduction and research questions
3.2. Institutional background and previous literature
3.3. Research methodology
3.4. Empirical results and discussion
3.5. Conclusions, limitations and future research agenda
Chapter 4. Corporate environmental disclosure under the stakeholder pressure: The role of NFRD
4.1. Introduction
4.2. Stakeholder theory, literature review and hypothesis development
4.3. Research methodology
4.4. Empirical results and discussion
4.5. Conclusions, limitations and future research agenda
Chapter 5. Employee disclosure under the stakeholder pressure: The role of NFRD
5.1. Introduction
5.2. Stakeholder theory, literature review and hypothesis development
5.3. Research methodology
5.4. Empirical results and discussion  
5.5. Conclusions, limitations and future research agenda
Chapter 6. Human rights disclosure: The coercive pressure of NFRD
6.1. Introduction
6.2. Theoretical framework, literature review and hypothesis development
6.3. Research methodology
6.4. Empirical results and discussion
6.5. Conclusions, limitations and future research agenda
Chapter 7. Corporate anti-corruption disclosure: Examination of the coercive pressure of NFRD
7.1. Introduction
7.2. Theoretical framework, literature review and hypothesis development
7.3. Research methodology
7.4. Empirical results and discussion  
7.5. Conclusions, limitations and future research agenda
Chapter 8. Corporate community involvement disclosure: The contribution of NFRD
8.1. Introduction
8.2. Literature review, theoretical framework and hypothesis development
8.3. Research methodology
8.4. Empirical results and discussion  
8.5. Conclusions, limitations and future research agenda
Chapter 9. Materiality of non-financial disclosure: The impact of NFRD
9.1. Introduction and research questions
9.2. Materiality based on the requirements of NFRD and EU Guidelines
9.3. Research design
9.4. Empirical results and discussion
9.5. Conclusions, limitations and future research agenda
Chapter 10. Reliability of non-financial disclosure: The impact of NFRD
10.1. Introduction and research questions
10.2. Reliability of information required by NFRD and EU Guidelines
10.3. Research design
10.4. Empirical results and discussion
10.5. Conclusions, limitations and future research agenda
List of Tables
List of Figures

The material is highly topical, well-motivated both academically and professionally. It contributes both to the international literature on the operationalization of the NFRD, and with Polish data, thus, contributing research from the underrepresented geographical area of Central and Eastern Europe. I also commend the authors for designing original research instruments (disclosure indexes) that could be further used to compare and contrast longitudinally and cross sectionally within Poland and the entire European region that is subjected to this very new piece of legislation. (…) Arguments are clear, hypotheses are clearly anchored in prior literature and (…) results are very well substantiated using correct and adequate research methods. Results are important in that they demonstrate both the outcome of the NFRD, and they fill gaps in our understanding of how nonfinancial reporting works and its effects. (…) Future research may definitely build on these results, to increase our understanding of how the non-financial directive impacts businesses, academia and practitioners. (…) Practitioners should be able to implement better the requirements of the NFRD, or to better understand the consequences of such requirements, and how their companies can benefit from them. Students should be able to use the results in their dissertations and better understand the reporting needs of their future employers. As such, they can be better prepared to access the work force, while at the same time understand the evolutions of their profession. Decision-makers should be more aware of the resources that are needed for their bodies and organizations to respond to the requirements of the NFRD, thus making better decisions for their organizations.

Prof. Catalin Albu
Bucharest Academy of Economic Studies, Bucharest, Romania