The level of compliance with the Italian Legislative Decree No. 254/2016 and its determinants: Insights from Italy

The present research explores non-financial mandatory disclosure in Italy in light of the recent Italian Legislative Decree No. 254/2016, which transposes the Directive 2014/95/EU on "the disclosure of non-financial and diversity information". The study pursues a twofold aim: first, it seeks to measure the level of compliance of non-financial information (NFI) with non-financial mandatory disclosure; and second, it seeks to identify which determinants favor higher compliance levels in the first year of the regulatory adequacy. To these ends, the study examines the non-financial 2017 statements of 50 listed Italian companies to test by means of a NFI Disclosure Score three determinants that could explain the level of compliance. The NFI Disclosure Score was set at 52.58%. Moreover, findings suggest that the type of reporting channels (stand-alone report or disclosure included in the Annual Report), the Guidelines Reporting Initiative (GRI) options chosen by the companies, and the presence of the Corporate Social Responsibility (CSR) Committee within the board all affect compliance levels. This study is one of the first research conducted on mandatory NFI disclosure providing indications for regulators and companies on how to improve NFI disclosure.