Corporate narrative reporting on Industry 4.0 technologies: does governance matter?

Abstract

Purpose This paper aims to provide early evidence on corporate transformation towards Industry 4.0 (CTTI4) in the UK, particularly by examining the effect of corporate governance on the narrative reporting of CTTI4. Design/methodology/approach The authors analyse all UK financial times stock exchange all-share non-financial firms that have published their annual reports for the period of 2013–2018. The authors use computerised textual analysis to measure the level of corporate reporting on Industry 4.0 (I4.0) for 1,001 firm-year observations. The authors used different regression models to test the research hypotheses. Findings The findings contribute to the growing literature on business model transformation in UK companies towards the I4.0 strategy. The findings show that the level of reporting on CTTI4 is improving over the sample period and varies between industries. The authors also find that better governance quality enhances the level of reporting on CTTI4. Practical implications The findings of this study inform decision makers and regulators about factors driving UK companies to report information about their actionable strategies to direct I4.0 endeavours. Originality/value The paper makes an important and novel contribution to corporate disclosure literature. So far as the authors know, it is the only paper to examine the impact of corporate governance on corporate narrative reporting on I4.0 technologies. Moreover, to the best of the authors’ knowledge, it is the first paper to show that the quality of corporate governance adds value to this strategic type of corporate disclosure.