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Article
Publication date: 19 March 2021

Muhammad Bilal Farooq, Rashid Zaman and Muhammad Nadeem

This study aims to evaluate corporate sustainability integration by evaluating corporate practices against the sustainability principles of inclusivity, materiality…

Abstract

Purpose

This study aims to evaluate corporate sustainability integration by evaluating corporate practices against the sustainability principles of inclusivity, materiality, responsiveness and impact outlined in AccountAbility’s AA1000 Accountability Principles (AA1000AP) standard.

Design/methodology/approach

Data comprise 12 semi-structured interviews with senior managers of listed New Zealand companies. Findings are evaluated against AccountAbility’s principles of inclusivity, materiality, responsiveness and impact, which are based on a normative view of stakeholder theory.

Findings

In terms of inclusivity, stakeholder engagement is primarily monologic and is directed more towards traditional stakeholder groups. However, social media, which is gaining popularity, has the potential to facilitate greater dialogic stakeholder engagement. While most companies undertake a materiality assessment (with varying degrees of rigour) to support sustainability reporting, only some use it to drive planning and decision-making. Companies demonstrate responsiveness to stakeholder concerns through corporate governance and sustainability initiatives. Companies are monitoring and measuring their impact on stakeholders using sustainability key performance indicators (KPIs). However, measuring traditional metrics is easier than measuring areas such as the community. In rare instances, the executive’s remuneration is linked to these sustainability KPIs.

Practical implications

The study findings offer useful examples of the integration of sustainability into corporate processes and systems. Practitioners may find the insights useful in understanding how sustainability is currently being integrated into corporate practices by best practice New Zealand companies. Regulators may consider incorporating AA1000AP into their corporate governance guidelines. Finally, academics may find the study useful for teaching business and accounting courses and to guide the next generation of business managers.

Originality/value

First, the study brings together four streams of research on how sustainability reports are prepared (inclusivity, materiality, responsiveness and impact) in a single study. Second, the findings offer novel insights by evaluating corporate sustainability against the requirements of a standard that has received little academic attention.

Details

Sustainability Accounting, Management and Policy Journal, vol. 12 no. 5
Type: Research Article
ISSN: 2040-8021

Keywords

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Article
Publication date: 13 October 2021

Charl de Villiers, Muhammad Bilal Farooq and Matteo Molinari

This study aims to examine the methodological and method-related challenges and opportunities arising from the use of video interviews in qualitative accounting research…

Abstract

Purpose

This study aims to examine the methodological and method-related challenges and opportunities arising from the use of video interviews in qualitative accounting research, focussed on collecting contextual data and visual cues, enriching communication quality and building and maintaining rapport with interviewees.

Design/methodology/approach

Prior literature and the authors’ experiences using video technologies for research, including conducting interviews, inform this research. This study uses a transactional conceptual refinement of information richness theory and channel expansion theory to critically analyse the challenges and opportunities of using video technology to conduct qualitative research interviews.

Findings

The ability, need for and significance of collecting contextual data depend on the researchers’ ontological and epistemological assumptions, and are, therefore, influenced by their research design choices. Video technology enables researchers to view research settings by video. In addition, whilst group/panel interviews have their advantages, it is often difficult to get everyone together in person, something video technology can potentially overcome. The feasibility and the quality of video interviews can be improved if both interview participants are experienced with using video technology, as well as with judicious investment in good quality video technology and through testing and practice. We also discuss how rapport building with interviewees can be facilitated by overcoming the video’s sense of disconnect and enhancing interviewees’ willingness to engage.

Originality/value

The study builds on the limited prior literature and considers the challenges and opportunities related to methodology and method when conducting video-based qualitative interviews in accounting research. Broadly, qualitative researchers will find the paper useful in considering the use of video interviews and in making research design choices appropriate for video interviews.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 7 June 2018

Muhammad Bilal Farooq, Ammad Ahmed and Muhammad Nadeem

The purpose of this study is to develop a sustainability reporter classification matrix (hereafter referred to as the “matrix”) to explain why some reporters publish…

Abstract

Purpose

The purpose of this study is to develop a sustainability reporter classification matrix (hereafter referred to as the “matrix”) to explain why some reporters publish better-quality sustainability reports than others and why some reporters experience improvements in the quality of their sustainability reports while others experience no improvement or a decline in sustainability report quality.

Design/methodology/approach

The study draws on the existing literature, which is analysed using a combination of legitimacy theory (i.e. commitment to sustainability reporting) and resource-based view (RBV, i.e. competencies in sustainability reporting).

Findings

A two-dimensional matrix is developed representing organisations’ competencies in (explained using the RBV) and commitment to (explained using legitimacy theory) sustainability reporting. Based on these two dimensions the matrix identifies four reporter classifications: incompetent uncommitted reporters (who publish low-quality reports); competent uncommitted reporters (who publish average-quality reports); incompetent committed reporters (who publish average-quality reports); and competent committed reporters (who publish high-quality reports). The matrix explains how reporters can transition from one quadrant/classification to another and how this transition can be either forward (moving from a lower quadrant to a higher quadrant), resulting in improvements in report quality, or backward (moving from a higher quadrant to a lower quadrant), leading to a deterioration in disclosure quality.

Originality/value

The study builds on the extant literature, combining legitimacy theory with the RBV, to provide a more complete explanation for why organisations publish sustainability reports of varying quality and why this quality varies over time. These insights can also be used to explain variations in the quality of integrated reports. The matrix may prove useful to practitioners as a tool for classifying reporters, identifying issues, assessing risk and tracking progress made.

Details

Meditari Accountancy Research, vol. 26 no. 2
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 24 October 2019

Muhammad Nadeem, Muhammad Bilal Farooq and Ammad Ahmed

The purpose of this paper is to analyse the relationship between female representation on corporate boards and intellectual capital (IC) efficiency – while prior studies…

Abstract

Purpose

The purpose of this paper is to analyse the relationship between female representation on corporate boards and intellectual capital (IC) efficiency – while prior studies focus on the relationship between gender diversity and firms’ financial performance.

Design/methodology/approach

Drawing on data from top 500 UK listed firms for 2007–2016 (3,279 firm-years), this study employs an adjusted-value-added intellectual coefficient as a measure of IC efficiency. Further, the two-step system-generalised method of moments has been applied to account for endogeneity issues.

Findings

The results reveal a significant positive relationship between female representation on boards and IC efficiency, including human capital, structural/innovation capital and financial capital efficiency. These results are robust to alternative proxies for the independent variable and difference-in-difference estimation.

Practical implications

The results posit that female representation on boards is associated with IC efficiency, which is vital for firms’ value creation and competitive advantage in the knowledge-economy era. The study also endorses current legislation to increase female representation on corporate boards.

Originality/value

This is among the limited studies to explore the role of female representation on boards in IC efficiency – while most prior studies relate IC efficiency to financial performance.

Details

Journal of Intellectual Capital, vol. 20 no. 5
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 5 March 2021

Muhammad Bilal Farooq, Rashid Zaman, Dania Sarraj and Fahad Khalid

This paper aims to evaluate the extent of materiality assessment disclosures in sustainability reports and their determinants. The study examines the disclosure practices…

Abstract

Purpose

This paper aims to evaluate the extent of materiality assessment disclosures in sustainability reports and their determinants. The study examines the disclosure practices of listed companies based in the member states of the Cooperation Council for the Arab States of the Gulf, colloquially referred to as the Gulf Cooperation Council (GCC).

Design/methodology/approach

First, the materiality assessment disclosures were scored through a content analysis of sustainability reports published by listed GCC companies during a five-year period from 2013 to 2017. Second, a fixed effect ordered logic regression was used to examine the determinants of materiality assessment disclosures.

Findings

While sustainability reporting rates improved across the sample period, a significant majority of listed GCC companies do not engage in sustainability reporting. The use of internationally recognised standards has also declined. While reporters provide more information on their materiality assessment, the number of sustainability reports that offer information on how the reporter identifies material issues has declined. These trends potentially indicate the existence of managerial capture. Materiality assessment disclosure scores are positively influenced by higher financial performance (Return on Assets), lower leverage and better corporate governance. However, company size and market-to-book ratio do not influence materiality assessment disclosures.

Practical implications

The findings may prove useful to managers responsible for preparing sustainability reports who can benefit from the examples of materiality assessment disclosures. An evaluation of the materiality assessment should be included in the scope of assurance engagements and practitioners can use the examples of best practice when evaluating sustainability reports. Stock exchanges may consider developing improved corporate governance guidelines as these will lead to materiality assessment disclosures.

Social implications

The findings may assist in improving sustainability reporting quality, through better materiality assessment disclosures. This will allow corporate stakeholders to evaluate the reporting entities underlying processes, which leads to transparency and corporate accountability. Improved corporate sustainability reporting supports the GCC commitment to implement the United Nations Sustainable Development Goals and transition to sustainable development.

Originality/value

This study addresses the call for greater research examining materiality within a sustainability reporting context. This is the first paper to examine sustainability reporting quality in the GCC region, focussing particularly on materiality assessment disclosures.

Details

Sustainability Accounting, Management and Policy Journal, vol. 12 no. 5
Type: Research Article
ISSN: 2040-8021

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Article
Publication date: 2 March 2021

Farzaneh Jalali Aliabadi, Muhammad Bilal Farooq, Umesh Sharma and Dessalegn Getie Mihret

The purpose of this study is to understand the efforts of key social actors in influencing the reform of Iranian public universities budgeting system, from incremental to…

Abstract

Purpose

The purpose of this study is to understand the efforts of key social actors in influencing the reform of Iranian public universities budgeting system, from incremental to performance-based budgeting (PBB), the tensions that arose as competing efforts of institutional change were undertaken, and ultimately the impact of these efforts on the extent to which the Iranian government transitioned to a system of PBB in public universities.

Design/methodology/approach

Data comprises of semi-structured interviews with managers and experts involved in the budget setting process and an analysis of budgetary policy documents, reports and archival material such as legislation. An institutional work lens is employed to interpret the findings.

Findings

While actors advocating the change were engaged in institutional work directed at disrupting the old budgetary rules by disassociating the rules moral foundations and creating new budgetary rules (through new legislation), universities undertook subtle resistance by engaging in extended evaluation of the new proposed PBB rules thereby maintaining the old budgetary rules. The reforms undertaken to introduce PBB in Iranian universities achieved minimal success whereby incremental budgeting continued to constitute by far a larger percentage of the budget allocation formula for university budgets. This finding illustrates change and continuity in university budgetary systems resulting from institutional work of actors competing to control the basis of resource allocation under the proposed PBB system by proposing contradicting models.

Practical implications

The findings highlight the importance of understanding the interplay of institutional work undertaken by competing social actors as they seek to advance their goals in shaping budgetary reforms in the public-sector. Such an understanding may inform policy makers who intend to introduce major reforms in public-sector budgeting approaches.

Originality/value

Unlike prior studies that largely focused on how organization-level budgeting practices responded to changes in public budgeting rules (i.e. at the site of implementation of the rules), this paper highlights how strategies of change and resistance are played out at the site of setting budgetary norms.

Details

Accounting, Auditing & Accountability Journal, vol. 34 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

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Article
Publication date: 17 December 2019

Muhammad Bilal Farooq and Charl de Villiers

The purpose of this paper is to examine how sustainability assurance providers’ (SAPs) promotion of sustainability assurance influences the scope of engagements, its…

Abstract

Purpose

The purpose of this paper is to examine how sustainability assurance providers’ (SAPs) promotion of sustainability assurance influences the scope of engagements, its implications for professional and managerial capture and the ability of sustainability assurance to promote credible reporting.

Design/methodology/approach

The authors conducted in-depth interviews with sustainability reporting managers (SRMs) and SAPs in Australia and New Zealand, using an institutional work lens to focus the analysis.

Findings

At the start of a new assurance engagement, SAPs offer pre-assurance and flexible assurance scopes, allowing them to recruit clients on narrow-scoped engagements. These narrow-scoped engagements focus on disclosed content and limit SAPs’ ability to add value and enhance credibility. During assurance engagements, SAPs educate managers and encourage changing the norms underlying sustainability reporting. At the end of the assurance engagement, SAPs provide a management report demonstrating added-value of assurance and encouraging clients broader-scoped engagements. However, with each assurance engagement, the recommendations offer diminishing returns, often leading managers to question the value of broad-scoped engagements and to consider narrowing the scope to realize savings. Under these conditions, client pressure (potentially managerial capture) along with practitioners’ desires to grow assurance income (potentially professional capture) can affect SAPs’ independence and the quality of their assurance work.

Practical implications

The study implies that regulation mandating the scope of engagements may be called for.

Originality/value

The authors contribute to the research literature in several ways. First, the findings show how professional and managerial capture occurs before, during and at the end of the assurance process. The authors highlight how perceived value addition from sustainability assurance diminishes over time and how this impacts the scope of engagements (with implications for SAPs independence and the quality of assurance work). The authors show these findings in a table, clarifying the complicated interrelationships. Second, the authors contribute to theory by identifying a new form of institutional work. Third, unlike previous studies focused on SAPs, the authors provide insights from the perspectives of both SAPs and SRMs.

Details

Accounting, Auditing & Accountability Journal, vol. 33 no. 2
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 24 June 2019

Muhammad Bilal Farooq and Charl de Villiers

The purpose of this paper is to explore how sustainability reporting managers (SRMs) institutionalise sustainability reporting within organisations.

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Abstract

Purpose

The purpose of this paper is to explore how sustainability reporting managers (SRMs) institutionalise sustainability reporting within organisations.

Design/methodology/approach

In total, 35 semi-structured interviews with SRMs in Australia and New Zealand were analysed using an institutional work perspective.

Findings

SRMs’ institutional work can be categorised into four phases with each phase representing a different approach to sustainability reporting. Organisations transition from phase one to four as they achieve a higher level of maturity and a deeper embedding and routinisation of sustainability reporting. These include educating and advocacy work undertaken by engaging with managers (phase one), transitioning to a decentralised sustainability reporting process (phase two), transitioning to leaner, focussed, materiality driven sustainability reporting (phase three), and using sustainability key performance indicators and materiality assessment reports for planning, decision-making, goal setting, performance appraisal, and incentives (phase four). However, SRMs face challenges including their inexperience, limited time and resources, lack of management commitment to sustainability reporting and low external interest in sustainability reporting. The study identifies ten reasons why material issues are not always (adequately) disclosed.

Practical implications

This study recommends more training and development for SRMs, and that regulation be considered to mandate the disclosure of the materiality assessments in sustainability reports.

Originality/value

This research extends the existing literature examining how sustainability reports are prepared and sheds further light on how a materiality assessment is undertaken. The study identifies ten reasons for the non-disclosure of material matters, including but not limited to, legitimacy motives. Researchers can use these reasons to refine their methods for evaluating published sustainability reports. At a theoretical level, the study provides four observations that institutional researchers should consider when examining forms of institutional work.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 5
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 29 November 2018

Muhammad Bilal Farooq and Charl de Villiers

The purpose of this paper is to examine the competition between accounting sustainability assurance providers (ASAPs) and non-accounting sustainability assurance providers…

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1404

Abstract

Purpose

The purpose of this paper is to examine the competition between accounting sustainability assurance providers (ASAPs) and non-accounting sustainability assurance providers (NASAPs), and how this competition influences the institutionalization of the evolving field of sustainability assurance.

Design/methodology/approach

An interpretivist research methodology, guided by an institutional work perspective, is used to analyze interviews with 15 SAPs and 35 sustainability reporting managers (SRMs) in Australia and New Zealand.

Findings

ASAPs prefer to use International Standard on Assurance Engagements 3000 (ISAE3000), because it is well recognized in the profession, adheres to ASAPs’ regulatory requirements, and mirrors their financial audit methodologies. This preference influences ASAPs’ institutional work as they compete against NASAPs and how they institutionalize sustainability assurance. ASAPs’ institutional works include presenting sustainability assurance as similar to a financial audit, arguing in support of a single provider for financial audits and sustainability assurance, and undermining NASAPs and their preferred sustainability assurance standard, AA1000 Assurance Standard (AA1000AS), by appealing to senior management. In comparison, NASAPs promote AA1000AS as a specialist standard among SRMs, emphasizing the standard’s sustainability enhancing qualities and its flexibility, while discrediting ASAPs and ISAE3000 as out of touch with sustainability objectives.

Research limitations/implications

A new conceptual model is constructed that can be used in institutional work research.

Practical implications

The accounting profession is encouraged to consider more flexible, innovative methods in new assurance markets. This involves using new assurance standards as well as developing specialist standards for new forms of assurance. Regulation over sustainability assurance could be helpful, but regulators should be careful not to stifle competition in this evolving field.

Originality/value

This paper examines how competition between ASAPs and NASAPs influences the institutionalization of sustainability assurance. The paper offers a new model for the analysis of institutional work, which could be used by researchers, new insights into the emerging field of sustainability assurance, as well as a figure and discussion that clarifies the broader implications of the findings.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 1
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 6 February 2017

Muhammad Bilal Farooq and Charl de Villiers

This paper focuses on the market for sustainability assurance (SA) services. The aims of this paper are to review academic efforts in the field, highlighting ground…

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1543

Abstract

Purpose

This paper focuses on the market for sustainability assurance (SA) services. The aims of this paper are to review academic efforts in the field, highlighting ground covered, provide a comprehensive understanding of the market for this new form of assurance and identify potential avenues for future research.

Design/methodology/approach

These objectives were met through a review of 50 academic journal articles identified as relevant to the SA field.

Findings

SA is a voluntary exercise in most jurisdictions, and engagements are structured to meet the needs (demands) of the market and the capabilities (supply) of assurance providers. This has given rise to a diverse landscape with engagements of differing scopes and objectives. From a demand side, the literature reveals a number of drivers (both at the macro and micro levels) and inhibitors for SA services. From a supply side, the literature sheds light on the assurance providers operating in the market and the standards they use when undertaking SA services. These practitioners include accountants (the big four) who use ISAE3000 and non-accountants who prefer AA1000AS. The review reveals five broad areas which have been the focus of existing studies. Finally, the study identifies seven avenues for future research in the SA field.

Originality/value

The findings of this paper will prove valuable to practitioners as it will assist them in understanding this new form of assurance. Researchers will benefit from an understanding on ground covered and future avenues for research.

Details

Pacific Accounting Review, vol. 29 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

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