Integrated Reporting, Organisational Legitimacy, and Long-Term Value Creation: A Longitudinal Study of Nigerian Financial Institutions

This study develops and tests an integrated reporting-legitimacy-value creation theoretical model using longitudinal data from Nigerian financial institutions, contributing original theoretical insights to the growing international integrated reporting literature. Integrated reporting is predicated on the assumption that transparent disclosure of how organizations create value across multiple capitals, including financial, human, social, intellectual, and natural, builds legitimacy with diverse stakeholders and underpins long-term value creation. However, empirical evidence on whether this theoretical promise is fulfilled in practice, particularly in developing economy contexts, remains limited. This study uses a 15-year longitudinal dataset covering 20 Nigerian banks and insurance companies from 2009 to 2023, a period spanning pre- and post-integrated reporting adoption for several institutions. Integrated reporting quality is assessed using a customized index aligned with the IIRC framework. Organisational legitimacy is operationalized through media sentiment analysis, stakeholder survey data, and regulatory compliance scores. Long-term value creation is measured using cumulative total shareholder return, long-term earnings quality, and customer relationship capital indicators. Structural equation modeling with longitudinal invariance testing is employed. Results establish a significant positive pathway from integrated reporting quality through legitimacy to long-term value creation. The legitimacy mediation effect is stronger for institutions with higher ESG exposure. The study proposes an original Integrated Reporting Legitimacy Chain model as a theoretical contribution and recommends mandatory integrated reporting adoption for all systemically important Nigerian financial institutions as a public interest governance obligation.

Keywords: integrated reporting, legitimacy theory, long-term value creation, Nigerian banks, SEM.