*3.2. Research Method: Content Analysis of Extractive Firms' Annual Reports*

This research investigates whether the unidimensional and multidimensional measures of reporting quality developed and used in the environmental reporting literature (e.g., [19,30,34,35,59]) are suitable for assessing the quality of ACD. Data were collected from corporate annual reports published by these ten UK extractive companies listed on the UK FTSE 100 for the period 2003 to 2019, a total count of 148 reports. The research sought to follow the approach of [57]. To recognize ACD content in the annual reports, 26 issues or items (detailed in Appendix A) were identified and organized into 6 categories. These were taken from items directly mentioned in the Bribery Act and/or recommended by TI, GRI, World Bank (WB), and Nation Combat Against Corruption (UNCAC).

The 'recording unit' for measuring the quantity of ACD was defined as the number of words. This recording unit includes the limitations of other recording units, such as sentences, lines, and pages, and considers both narrative and non-narrative disclosure, such as graphs, tables, and pictures [31,50]. Given the low quantity of ACD relative to the environmental content, words were chosen as fractions of pages, which is hard to measure and dependent on type size and requires decisions on whether the whole page is being considered or just the proportion of textual rather than a table or graphical content. Following earlier research and a pilot study, the following words and phrases were searched for in each of the 148 annual reports: 'corruption', 'bribery', 'UK Bribery Act', 'OECD', 'UNCAC', 'EITI', 'fraud', 'payment facilitation', 'code of conduct', 'dismiss', 'terminate', 'training', 'zero tolerance', 'corrupt', 'bribe', 'code of ethics', 'donation', 'donate, 'charity', 'charitable donation', 'political donation', 'political contribution'. Each occurrence was checked, and a decision was made as to whether the occasion was referring to ACD as opposed to another disclosure topic. The number of words in the ACD sentences/paragraphs/sections was collected and, as collected, were assessed for which of the 26 questions or issues that had been identified within ACD were being addressed. Once identified as ACD, the words in the relevant sentences were counted and assigned to one or more of the questions. Scoring for each of the disclosure metrics was then carried out. The collection mechanism was designed to avoid double counting of text that tackled more than one of the 26 issues whilst still recognizing that each of the issues had been addressed.

#### *3.3. Metrics of Corporate Disclosure*

The following metrics, see Table 2 and below, were chosen from a review by [30] of the literature on environmental reporting measures. Some measures were not appropriate or needed minor adjustments for ACD due to the relatively low volume of disclosure, the lack of pictures and graphs, and the lack of or ambiguity of external assurance of this content. The measures selected are detailed below. The table separates the unidimensional from the multidimensional measures, and each measure is discussed below.

**Table 2.** Measures of assessing disclosure quality and quantity.


See the text below for details on the equations.

#### 3.3.1. Standardized Quantity Index (SQNI)

This metric measures the ACD word count from an annual report, subtracts the lowest word count recorded in an annual report in the sample for that year, and then divides this by the range in word count (largest less least) again for that sample year. This metric is adjusted from page count due to the low level of ACD disclosure compared to environmental disclosure.
