Financial performance sustainability is a firm’s strategic ability to maintain long-term wealth and operational equilibrium, a process often complicated by managerial and environmental volatility (De Graaff & Steens, 2023). In capital markets, issues such as information opacity, earnings management, and reliance on high-cost liquidity—exacerbated by sanctions and technological gaps—undermine this sustainability (Zennaro et al., 2024). Furthermore, macroeconomic pressures like inflation and exchange rate fluctuations diminish financial predictability.

Under these volatile conditions, Integrated Reporting (IR) serves as a pivotal mechanism for stability by synthesizing strategic and sustainability data (Alsayed, 2024). By mitigating information asymmetry and bolstering resilience, IR shifts managerial focus toward long-term value creation and stakeholder trust (Ashtab & Dehghan, 2023). However, the impact of IR is not uniform; it is contingent upon a firm’s unique risk environment. This environment is shaped by the interplay between financial constraints, institutional ownership structures, and product market competition, which explains the heterogeneity in sustainability outcomes (Roberts et al., 2023). Accordingly, the following hypotheses are formulated to empirically test these relationships.

H1: Integrated Reporting has a positive and significant impact on financial performance sustainability.

H2: The moderating effect of financial constraints weakens the impact of integrated reporting on financial performance sustainability.

H3: The moderating effect of institutional ownership strengthens the impact of integrated reporting on financial performance sustainability.

H4: The moderating effect of product market competition strengthens the impact of integrated reporting on financial performance sustainability.

2. Literature Review

Integrated Reporting (IR) represents a strategic evolution in value creation, utilizing signaling theory to stabilize financial performance sustainability by integrating financial and qualitative data (Barth et al., 2022). From an agency theory perspective, IR fosters integrated thinking, mitigating managerial short-termism and opportunistic behaviors to ensure earnings stability (Melloni & De-Villiers, 2019). However, its effectiveness is strictly contingent upon the firm’s specific risk environment (Roberts et al., 2023).

In instances of financial distress, pecking order theory suggests IR serves as "informational collateral," preventing credit deadlocks and reducing capital costs through enhanced transparency (Garcia-Sanchez & Nguyen, 2022; Lee & Zhang, 2022). Furthermore, according to the efficient monitoring hypothesis, institutional investors act as a disciplinary mechanism, validating IR and shifting market focus toward long-term sustainability (Bushee & Noe, 2021; Khoa, 2024). Finally, product market competition serves as an external disciplinary force that promotes financial sustainability via strategic differentiation, even when considering proprietary cost constraints (Pavlović et al., 2023). This theoretical synthesis explains how internal and external pressures redefine IR dynamics.

3. Methodology

This applied, descriptive study follows a retrospective approach using quantitative data from 126 Tehran Stock Exchange companies (1,260 firm-year observations) over the period 2014–2023. Unit root tests (Levin, Lin, and Chu) ensured data stationarity. Based on Chow and Hausman test results, the Fixed Effects panel data method was selected to estimate the four research models and test the hypotheses.

〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖Size〗_(i,t)+α_3 〖Leveage〗_(i,t)+α_4 〖Growth〗_(i,t)+α_5 〖MTB〗_(i,t)+α_6 〖ROA〗_(i,t)+ε_(i,t) (1)

〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖FC〗_(i,t)+α_3 (〖IR〗_(i,t)*〖FC〗_(i,t))++α_4 〖Size〗_(i,t)+α_5 〖Leveage〗_(i,t)+α_6 〖Growth〗_(i,t)+α_7 〖MTB〗_(i,t)+α_8 〖ROA〗_(i,t)+ε_(i,t) (2) 〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖INS〗_(i,t)+α_3 (〖IR〗_(i,t)*〖INS〗_(i,t))++α_4 〖Size〗_(i,t)+α_5 〖Leveage〗_(i,t)+α_6 〖Growth〗_(i,t)+α_7 〖MTB〗_(i,t)+α_8 〖ROA〗_(i,t)+ε_(i,t) (3)

〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖LI〗_(i,t)+α_3 (〖IR〗_(i,t)*〖LI〗_(i,t))++α_4 〖Size〗_(i,t)+α_5 〖Leveage〗_(i,t)+α_6 〖Growth〗_(i,t)+α_7 〖MTB〗_(i,t)+α_8 〖ROA〗_(i,t)+ε_(i,t) (4)



The variables in these two models include financial performance sustainability (〖SFP〗_(i,t)),integrated reporting (〖IR〗_(i,t)), Financial Constraints (〖FC〗_(i,t)), Institutional Ownership (〖INS〗_(i,t)), Product Market Competition (〖LI〗_(i,t)), firm size (〖Size〗_(i,t)), financial leverage (〖Leveage〗_(i,t)), Growth Rate (〖Growth〗_(i,t)), firm value (〖MTB〗_(i,t)) and Return on Assets (〖ROA〗_(i,t)).

4. Results

The research hypotheses were tested using multiple linear regression. To ensure the robustness of the results and avoid spurious regression, several diagnostic tests were performed beforehand, as detailed in Table (1).

Table 1

Diagnostic tests of the research models

Model Test Statistic Probability Test Result



(1) Chow 10.36 0.000 Panel Data Method

Hausman 15.09 0.012 Fixed Effects

Breusch-Pagan-Godfrey 2.26 0.159 Homoscedaticity

Wooldriidge 1.56 0.457 No Autocorrelation



(2) Chow 11.14 0.000 Panel Data Method

Hausman 16.28 0.008 Fixed Effects

Breusch-Pagan-Godfrey 2.41 0.124 Homoscedaticity

Wooldriidge 1.56 0.457 No Autocorrelation



(3) Chow 11.52 0.000 Panel Data Method

Hausman 16.88 0.019 Fixed Effects

Breusch-Pagan-Godfrey 2.32 0.162 Homoscedaticity

Wooldriidge 1.89 0.236 No Autocorrelation



(4) Chow 11.33 0.000 Panel Data Method

Hausman 16.67 0.013 Fixed Effects

Breusch-Pagan-Godfrey 2.12 0.160 Homoscedaticity

Wooldriidge 1.78 0.334 No Autocorrelation



The estimation results of the four models indicate that integrated reporting has a positive and significant impact on financial performance sustainability coefficient of 0.062, p = 0.007. This suggests that transparency arising from the integration of financial and non-financial information builds stakeholder trust and enhances corporate profitability stability (supporting H1). Regarding moderating factors, the findings reveal that financial constraints exert a weakening effect on this relationship, with a significant interaction coefficient of -0.042, p=0.009, thus supporting H2. Conversely, institutional ownership does not play an active supervisory role in strengthening the impact of integrated reporting, as the interaction term failed to reach statistical significance p = 0.91, leading to the rejection of H3. Finally, product market competition significantly strengthens the positive effect of integrated reporting on financial performance sustainability coefficient of 0.009, p = 0.008, confirming H4. Overall, the results demonstrate that alongside voluntary reporting, financial structure and the competitive environment are decisive factors in firms' financial sustainability.

5. Discussion

The study confirms that integrated reporting enhances financial sustainability, aligning with Elsayed (2024), Berendri and Stark (2023), and Giuki et al. (2024). This synergy builds stakeholder trust through transparency. However, financial constraints weaken this relationship, consistent with Habib et al. (2024) and Pourheidari (2010), suggesting that capital scarcity hinders long-term disclosure benefits. Conversely, the insignificant role of institutional ownership contradicts Khan (2024) and Bushee and Noe (2021), highlighting a passive monitoring environment. Finally, market competition reinforces the positive impact of reporting, supported by Pavlovic et al. (2023) and Khajavi et al. (2024), proving that competitive pressures drive firms toward sustainable performance.

6. Conclusion

This study concludes that integrated reporting is a vital driver of corporate financial sustainability, yet its efficacy is moderated by the firm's financial health and market environment. We confirm that while transparency stabilizes profitability (H1) and competitive markets amplify these gains (H4), acute financial constraints significantly hinder the sustainability benefits of reporting (H2). Interestingly, the rejection of H3 highlights a governance gap, where institutional owners do not effectively utilize integrated information to enhance firm value. Policymakers and managers should, therefore, focus on alleviating financial barriers and fostering competitive dynamics to maximize the utility of integrated reporting. Future research could explore why institutional governance remains ineffective in this specific reporting context.