Mandatory non-financial disclosure: is everybody on the same page about business model reporting?

ABSTRACT Recent regulatory initiatives, such as the EU Non-Financial Reporting Directive and the UK Companies Act, require companies to mobilise the business model concept as a framework to disclose non-financial information in the annual report. These regulatory initiatives are based on a reflexive legal approach that avoids specifying what should be disclosed or articulating minimum disclosure requirements. In this context, this study investigates whether and to what extent preparers and users of non-financial information have a shared understanding of the business model concept and its role in reporting. An exploratory survey was conducted involving 35 users and 13 preparers, followed by 13 in-depth interviews, with both stages of research conducted from Searle's perspective of institutional reality. The findings present a somewhat divergent picture, indicating a lack of widespread consensus around a specific definition of a business model, its constitutive elements, and its reporting function. Thus, we conclude that the business model remains a concept under social construction in this domain and highlights areas of intervention. This study contributes to the existing literature by discussing how the absence of a common definition might hinder the otherwise positive effects of business model disclosure regulation from enhancing corporate transparency. Archival studies on business model reporting generally show low levels of disclosure, indicating poor informativeness. Our evidence adds to the accounting literature by considering the role of a shared view of the business model among market participants as a determinant of business model reporting quality and informativeness.