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This paper aims to examine the processes of sustainability reporting assurance (SRA) and the influence they have on shaping perception from disclosures. Given the evidence of inconsistencies and ambiguities in assurance processes, this paper examines how legitimacy is attained and maintained at different stages of SRA.

Evidence collected from 23 semi-structured interviews with assurance providers (APs), consultants, professionals and non-governmental organisations (NGOs) (non-APs) was used to conduct a thematic analysis from the perspectives of interviewees.

APs and non-APs are united in recognising the value of SRA, although, perspectives on transparency between the two groups differ. Experience and industry knowledge are essential to SRA delivery with non-APs preferring accounting APs. Nevertheless, non-APs are concerned about the role of companies in deciding assurance scope, as it can affect scrutiny. APs favour data accuracy (as opposed to data relevance) assurance due to team dynamics and internal review influences, with the latter also restricting assurance innovation. APs are interested in accessing better evidence and stakeholder engagement evaluations. Providing advisory services was not rejected by all APs. The perspectives of APs and non-APs demonstrate how progress in SRA has gained pragmatic legitimacy with noticeable gaps that serve to undermine attainment of moral legitimacy.

SRA is a developing practice that will adopt changes as it continues to mature; some of these changes could impact findings in this research. General perspectives on SRA were sought from interviewees, this affected the ability for an in-depth focus on any of the range of interesting SRA issues that arose over the course of the research. Interviews were conducted with relevant parties in the SRA space that operate in the UK. Perspectives from parties outside the UK were not solicited.

Companies make an important decision to commission SRA. Findings in this research have highlighted specific non-APs issues of concern that can be useful in structuring operations and reporting regimes to facilitate assurance procedures. The findings will also be helpful to APs as they can direct more emphasis on stakeholder concerns towards demonstrating greater stakeholder accountability. Regulatory and standard setters can enact appropriate policies that can potentially drive the practice forward for assessment of cognitive legitimacy.

The findings provide relevant account of stakeholder voices on the quality of corporate disclosures that has a direct effect on the wellbeing of communities and sustainability of societies. Collective stakeholder input on expectations can shape sustainability discourse.

This research demonstrates the applicability of financial audit quality indicators in SRA processes, extends the debate around the effectiveness of new audit fields and highlights the challenges of maintaining legitimacy with different audiences.

This study examines how assurors make sense of sustainability assurance (SA) work and how interactions with assurance team members and clients shape assurors’ sensemaking and their actual SA work.

To obtain detailed accounts of how SA work occurs on the ground, this study explores three SA engagements by interviewing the main actors involved, both at the client firms and at their Big Four assurance providers.

Individual assurors’ (i.e. partners and other team members) sensemaking of SA work results in the crafting of their logics of action (LoAs), that is, their meanings about the objectives of SA work and how to conduct it. Without organizational socialization, team members may not arrive at shared meanings and deviate from the team-wide assurance approach. To fulfill their objectives for SA work, assurors may engage in socialization with clients or assume a temporary role. Yet, the role negotiations taking place in the shadows of the scope negotiations determine their default role during the engagement.

Two options are available to help SA statement users gauge the relevance of SA work: either displaying the SA work performed or making it more uniform.

This study theoretically grounds how assurors make sense of SA work and documents how (the lack of) professional socialization, organizational socialization and socialization of frequent interaction partners at the client shape actual SA work. Thereby, it unravels the SA work concealed behind SA statements.

This paper aims to examine the association between sustainable development goals (SDGs) at the micro level and firms’ inclination to sustainability reporting and assurance (SRA).

The authors use global data from 44 countries in the 2016–2021 period and perform the probit and logistic models in testing the hypotheses.

The results show that socially responsible firms adopting SDGs are more likely to issue sustainability reports and obtain assurance statements. The authors find that the link between firms’ compliance with SDGs and SRA is stronger for firms domiciled in stakeholder-oriented countries.

SRA issues are gaining the attention of regulators, investors, businesses and academics worldwide. Results pertaining to the relationship between SDGs and SRA are robust to alternative measures and several sensitivity tests and, thus, provide policy, practice and research implications.

Although the association between sustainability assurance (SA) quality and firm value has been examined in previous studies, the moderating relationship is novel in this study and highlights the effect of corporate environmental sustainability performance (CESP) on the relationship between SA quality and firm value. This study aims to examine whether such an effect is strengthened or weakened by eco-efficiency, as measured by ISO 14001 certification, aggregate CESP score and each individual dimension of CESP (emission reduction [ER], resource reduction [RR] and product innovation [PI]).

The sample includes 40 companies in Euronext Paris with the largest market capitalisations (the Cotation Assistée en Continu 40 [CAC 40] index) from 2010 to 2020. The authors apply the feasible generalised least squares regression technique to estimate all the regression models. Because observed associations may be biased by reverse causation or self-selection, the authors use the instrumental variable approach and Heckman two-stage estimation.

The results show that SA quality had a positive and significant effect on firm value. Second, the authors demonstrate that CESP, as assessed by ISO 14001 certification, has a stronger interaction with assurance quality and acting as a moderator variable. Using the ASSET4 scores, an alternative proxy for CESP, the authors find inconsistent evidence regarding the impact of CESP attributes. The CESP and ER scores are homogeneous and have a positive effect on firm value. However, the PI and RR CESP attributes are not homogenous and do not have the same interactive effect on firm value. The results are robust to the use of an instrumental variable approach and the Heckman two-stage estimation procedure.

Policy implications: Regulators may be interested in the findings when considering current and future assurance requirements for sustainability reporting, and shareholders when considering SA as an investment choice criterion. The insights into and enhanced understanding of the incentives for obtaining high SA quality can help policymakers develop effective policies and initiatives for SA. Considering the possible improvements in sustainability performance when obtaining a high level of sustainability verification, governments need to consider mandating SA.

Firms receive clear confirmation of the importance of investing in SA quality. Financial markets do not evaluate SA dichotomously but reward companies with higher SA quality because of the greater credibility it provides. Firms should allocate a significant percentage of their annual budgets and other relevant resources to environmental training and development programmes to improve and maintain environmental performance. If they care about environmental issues, they must announce this by issuing sustainability reports and seeking assurance of the information disclosed. High-quality assurance not only has a significant effect on investors’ investment reliability judgements but also the perceived credibility of environmental performance fully moderates the effect of assurance on these judgements.

This study has social implications; the authors find that the French market rewards firms that provide a high-quality assurance to guarantee the integrity of their sustainability reports. Therefore, by incorporating environmental sustainability into their financial goals, a better assurance ultimately will urge firms to move from green washing to strategic goals, which is beneficial for society. Further, firms that focus on sustainability as part of their business strategy may attract employees who engage in green behaviours at work and create a friendlier and productive environment because it gives meaning to the work they do and keeps them engaged to the level needed to perform their jobs capably.

This study contributes to the literature by re-examining the relationship between SA quality and firm value. It also provides new evidence on the moderating effect of CESP on the SA quality–firm value nexus. Specifically, it explores the joint effect of credibility and eco-efficiency on market confidence in sustainability information.

This paper aims to examine the influence of sustainability assurance report format (separate versus combined with financial information assurance) and level (limited versus reasonable) on nonprofessional investors’ judgments.

This study uses a 2 × 2 between-participants experiment with 436 US nonprofessional investors. The authors manipulate sustainability assurance report format and level to identify differences in judgments of information credibility, investment desirability and investment amount.

This study finds that sustainability assurance level influences participants’ judgments only when the financial and sustainability assurance reports are presented separately. Specifically, participants assess sustainability performance information as more credible and make higher investment judgments when presented with a separate limited, as opposed to reasonable, assurance sustainability report.

The International Auditing and Assurance Standards Board expressed concerns regarding whether assurance reports accompanying emerging forms of extended external reporting (EER) effectively communicate the level of assurance provided by the independent practitioner. The result that assurance level does not influence investor judgments in the combined reporting format appears contrary to the idea that integrated reporting should provide connectivity between financial and sustainability information. The finding that investors make higher investment and credibility judgments with limited assurance is inconsistent with the intent of sustainability assurance professional guidance and recent research results. Together, the findings suggest that investors may not be able to distinguish between differing levels of sustainability assurance when this information is presented in a combined report format.

Standard setters should consider how sustainability assurance report format and assurance level impact nonprofessional investor judgments.

Research on the effects of EER assurance report format is sparse. The results indicate that even slight changes in assurance report wording may cause investors to perceive that a limited assurance report conveys a higher assurance level than a reasonable assurance report.

This study elucidates the interactive relationship of sustainability assurance (SA) quality with corporate environmental sustainability performance (CESP) and firm value and explores the moderating impact of CESP on the SA quality–firm value relationship.

The sample comprises 320 firm-year observations of 40 companies listed on the Cotation Assistée en Continu (CAC 40) from 2010 to 2019. The authors use the simultaneous equations model to capture the CESP and SA quality–firm value relationship and apply the three-stage regression and generalised method of moments approaches to address possible endogeneity.

The results show that CESP, as assessed by International Organisation for Standardisation (ISO) 14001 certification, has a significant positive effect on firm value, the relevance of which implies that in the case of good environmental performance, society's perception of a firm is much more favourable; consequently, the firm is likely to be rewarded with a premium value in capital markets. In addition, environmental performance has a stronger interaction with SA quality, acting as a moderator variable; thus, greater SA quality signals credibility owing to increased eco-efficiency. The authors interpret their findings within a multi-theoretical framework that draws insights from legitimacy, stakeholders and signalling theoretical perspectives.

This study contributes to the literature by re-examining the relationship between SA quality and firm value. It also provides new evidence of the moderating effect of CESP on the SA quality–firm value nexus. Specifically, this study explores the joint effects of credibility and eco-efficiency on market confidence in sustainability information. The authors use a simultaneous equation model to capture the reciprocal association between SA quality and firm value, whereas prior studies on SA quality and market performance have frequently used single-equation regression. The authors also find that CESP positively moderates the relationship between SA quality and firm value. Including CESP and exploring the moderating impact of eco-efficiency on the SA quality–firm value relationship is a novel approach.

This paper aims to investigate the relationship between the readability of sustainability reports and assurance provider effort, captured by assurance delay and the moderating effect of the assurance provider.

This sample consists of companies operating in sustainability sensitive industries from 39 countries for the period that covers the years 2016–2018.

The results show that poor sustainability reporting readability is associated with longer assurance delays. Indeed, assurance providers spend more effort assuring clients when sustainability reports are less readable, as shown by long assurance delay. In addition, increases in assurance delay associated with poor sustainability reporting readability are driven by accounting assurance providers. These results hold after controlling for endogeneity using Heckman's (1979) analysis and other measures of assurance delay readability used in prior literature. By checking the specialization of assurance provider partners and setting aside dominant countries, the authors provide insight into the impact of assurance provider specialization on the association between sustainability report readability and assurance provider effort measured by assurance delay and thus, lending further confidence to the strength of the study’s main findings.

This research provides preliminary evidence on the relationship between sustainability reporting readability and assurance delay as well as the influence of accounting assurance providers.

Sustainability assurance practice is viewed as a tool to add or enhance credibility. This study could be considered as another step into driving the standardization of sustainability reporting practice internationally.

This is the first investigation conducted in the sustainability literature on the assurance provider's response to the readability of sustainability reports.

This study examines the association between corporate tax avoidance and the cost of debt (COD). It also investigates the moderating effect of integrated report (IR) assurance on tax avoidance/COD relationship.

Based on a sample of 76 South African companies listed on the Johannesburg Stock Exchange (JSE) from 2010 to 2020, the authors built and estimated regression models using the feasible generalized least squares (FGLS) method. The authors significantly mitigated the endogeneity concerns using propensity score matching (PSM), difference-in-differences (DID) analysis and fixed effects regression.

The authors found that tax-avoiding firms pay higher costs of debt due to information asymmetries and agency problems. Bankers systematically reflect the increase in tax avoidance by adjusting the COD upward. However, results show that the assured IR disclosure mitigates these problems, which decreases the COD for tax avoidance strategies adopters. Using a quasi-natural experiment, well-grounded evidence was provided showing that the decrease in the COD for debtors who engage in tax avoidance practices is attributed to the availability of an assured IR.

This study provides plausible evidence in favor of the role that an assured IR can play in capital allocation decisions. Consequently, it is likely to push policymakers in South Africa and other countries to set standards for IR assurance.

This is the first study that investigates and validates the role of IR assurance in solving the controversy about the “tax saving effect” vs. “risk exposure effect” that bankers face while identifying debtors with successful (non-risky/cash-saving) tax avoidance practices and those with non-successful (risky) ones.

The purpose of this study is to investigate the association between sustainability reporting (SR) and firm value considering the moderating effect of audit committee (AC) quality and auditor tenure on this association.

The data for the study comprise 41,500 firm-year observations worldwide between 2007 and 2018 drawing on ten main sectors. The authors run a country-industry-year fixed effect regression and address endogeneity concerns with further methodologies.

First, the authors find that SR is significantly and positively associated with both firm value and industry-adjusted firm value. Further tests revealed that the baseline findings hold for SR assurance and the Global Reporting Initiative framework as well. Second, the moderation analysis outlined the significant moderating role that the AC assumes. More specifically, AC independence and expertise were found to strengthen the value relevance of SR. Third, the market also appreciates the moderation of auditor tenure in SR.

Investors appreciate greater corporate transparency which means that sustainability reports are likely to reduce information asymmetry and thereby agency conflicts. In addition, the moderation analyses imply that shareholders consider AC quality while they attach value to corporate sustainability reports. Hence, the structure of the auditing function appears to perform an implicit assurance role in the value relevance of sustainability reports. In line with these implications, corporations can review and re-design their auditing function and decide whether or not they will attest to sustainability reports given that AC independence and expertise and auditor tenure predict this decision.

The study highlights the audit function’s growing role beyond financial reporting and suggests implications for ACs and auditors in ensuring shareholders about the credibility of SR.

This study aims to review the literature on non-financial information (NFI) assurance including external assurance of sustainability reports (SRA) and integrated reports (IRA). The objectives are as follows: provide an overview of academic research; understand the nature of NFI assurance engagements by organising the literature around the five key elements of an assurance engagement; develop a framework for understanding NFI assurance; and provide directions for future research.

The study undertakes a structured literature review of 179 articles published from 1999 to 2023.

The review identified 324 researchers located in 35 different countries who published 179 articles on SRA and IRA. The researchers, their locations, journals, methods, theories and themes are examined. The literature is structured around the definition of an assurance engagement including a tripartite arrangement, subject matter, a suitable criterion, sufficient appropriate evidence and a written assurance report. A framework for understanding NFI assurance is offered. Avenues for future research, structured around the five elements of an assurance engagement, are presented.

Researchers will benefit from an overview of the literature and guidance on areas for future research. Lecturers can use the findings to develop content for their auditing courses. Reporting managers will benefit from a better understanding of this new form of assurance. Regulators can use this study’s insights to better inform the development of laws and corporate governance codes mandating NFI assurance. Standard setters can use these findings to guide the emergence of the new assurance standards. Assurance practitioners may use this research to inform practice.

The findings may prove useful in addressing capture, which deters NFI assurance from enhancing disclosure credibility and fulfilling its transparency and accountability role. This is to the detriment of the wider society.

The consolidation of the literature around the five key elements of an assurance engagement is unique. The framework devised offers useful insights into the dynamics of assurance generally and NFI assurance more specifically. The study is timely given the new European Union regulations on NFI reporting and assurance and the work of the International Audit and Assurance Standards Board in developing a specialist NFI assurance standard.