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Article
Publication date: 6 November 2017

Renzo Mori Junior and Peter Best

Previous studies have argued that the incapacity of the majority of SR stakeholders to identify the different types of assurance processes contributes to the existence of…

Abstract

Purpose

Previous studies have argued that the incapacity of the majority of SR stakeholders to identify the different types of assurance processes contributes to the existence of an expectation–performance gap and affects the credibility of such reports. To improve this situation, the Content Index Model was updated by the Global Reporting Initiative (GRI) in its latest sustainability reporting guideline – “G4”. This paper aims to assess, using a qualitative exploratory approach, whether this updated Content Index Model changes the expectation–performance gap of stakeholders on assurance processes for GRI sustainability reports. This paper also assesses whether this Content Index Model improves the credibility of the assurance processes for GRI sustainability reports, considering participants’ points of view.

Design/methodology/approach

This paper used a qualitative approach to obtain participants’ perceptions in relation to the objectives of the paper. Two questions were used to assess whether the updated Content Index Model improves stakeholders’ understanding in regards to the assurance process of GRI sustainability reports, thus changing the expectation–performance gap and improving the credibility of GRI sustainability reports. The following questions were asked: Does the Content Index Model help SR stakeholders to better understand the scope of the assurance processes? and Why? Does the Content Index Model presented help to improve credibility of assured SR? and Why?

Findings

Results obtained demonstrate that the updated Content Index Model improves SR stakeholders’ understanding regarding the scope of the assurance processes conducted, thus reducing their expectation–performance gap on assurance processes and improving the credibility of SR. Participants also commented on the relationship among transparency, understand ability, trust and credibility.

Research limitations/implications

First, participants were responsible for identifying the group that best represents his/her professional experience. The fact that participants have professional experience in more than one of the groups identified in this research (assurers, reporters and readers) could have impacted on their perceptions regarding the assurance process. Second, the interviews do not rely on practical experience with the updated Content Index Model, rather, they rely on participants’ perceptions regarding the hypothetical use of this Content Index Model. Third, descriptive statistical analyses in this paper aim to illustrate participants’ perceptions rather than to develop robust statistically significant conclusions. Fourth, the main author of this paper developed the Content Index Model, and this may have impacted the responses of the participants and/or the analysis of data. Also, the specific geographic area where interviews were conducted, the selection technique used and the non-statistical significance of the analyses presented in this paper must be carefully interpreted and cannot be generalised to a broader context based on this paper alone. Finally, interviews were developed and conducted before May 2013, before the GRI officially launched the GRI G4 Sustainability Reporting Guidelines.

Practical implications

As the GRI is the most commonly used sustainability report framework to date, this study has the possibility to affect all companies that publish their sustainability reports based on the GRI framework and all assurance providers currently providing assurance services for such report. Also, findings would be very useful for sustainability reports’ readers worldwide.

Originality/value

As sustainability reports are the most common instruments used by organisations to provide accountability about the environmental and social performance, and assurance is the most common instrument used by organisations to improve credibility of such reports; it is important to assess whether those instruments are achieving their goals and understand the role played by the GRI G4 Content Index Model in this context. As the GRI G4 was recently launched, there is no study published yet assessing the effectiveness of its new content index model.

Details

Sustainability Accounting, Management and Policy Journal, vol. 8 no. 5
Type: Research Article
ISSN: 2040-8021

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Article
Publication date: 3 April 2017

John Abernathy, Chad Stefaniak, Anne Wilkins and Jacqueline Olson

The purpose of this paper is to identify and synthesize the current academic literature on emerging trends to increase CSR reporting credibility.

Abstract

Purpose

The purpose of this paper is to identify and synthesize the current academic literature on emerging trends to increase CSR reporting credibility.

Design/methodology/approach

This paper synthesizes literature on emerging trends to increase CSR reporting credibility from the past ten years, focusing mainly on the most recent five years, by searching ABI/Inform and Business Source Premier for academic papers containing the following keywords: Corporate Social Responsibility (CSR) Reporting, CSR, Sustainability, and Social Responsibility.

Findings

This paper identifies four relatively unexplored trends to improve CSR credibility: CSR assurance, integrated reporting, CSR reporting standards, and CSR regulation.

Research limitations/implications

This study will be of use to academic researchers to facilitate research and discussion on the credibility of CSR disclosure.

Practical implications

Regulatory agencies, boards of directors, customers, suppliers, and investors are increasingly using CSR information for decision making; therefore the credibility of the information is important.

Originality/value

Much of the extant research investigating CSR has focused on financial performance metrics. The study synthesizes the recent CSR literature, including some interdisciplinary research focusing on emerging accountability trends in reporting. The authors identify several research opportunities that will enhance the authors’ understanding of CSR reporting.

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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: 27 May 2021

Taslima Akther and Fengju Xu

This study aims to investigate the factors that enhance the credibility of and confidence in audit value.

Abstract

Purpose

This study aims to investigate the factors that enhance the credibility of and confidence in audit value.

Design/methodology/approach

Data were collected from 254 institutional investors through a questionnaire survey and were analyzed using partial least squares structural equation modelling (PLS-SEM).

Findings

The findings reveal that the two influential predictors of enhanced credibility and confidence are perceived auditor independence and improved auditor communication. Factors related to auditor–client affiliation, such as restrictions on providing non-audit services, mandatory auditor rotation and the presence of effective audit committees, are identified as creating the perceived independence. Improved auditor communication is linked with improving the audit report and ensuring audit education, thus creating more sophisticated users who better understand the scope and purpose of an audit. Furthermore, independent audit oversight acts as a moderator in the relationship between perceived auditor independence, improved auditor communication and enhanced credibility. Enhanced credibility can lead to greater confidence in audit value.

Originality/value

In the wake of the global financial crisis and loss of confidence in the role of auditors, this study investigates the factors that can enhance the credibility of and confidence in audit value, especially in a non-Anglo-American setting. This study is unique in terms of methodological development, as it uses a higher-order Type II reflective–formative model using PLS-SEM.

Details

Accounting Research Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 12 July 2021

Philipp Ottenstein, Saskia Erben, Sébastien Jost, Carl William Weuster and Henning Zülch

The aim of this paper is to examine the effects of the European Non-financial Reporting Directive (2014/95/EU) on firms' sustainability reporting practices, especially…

Abstract

Purpose

The aim of this paper is to examine the effects of the European Non-financial Reporting Directive (2014/95/EU) on firms' sustainability reporting practices, especially reporting quantity (i.e. availability of information) and quality (i.e. comparability and credibility).

Design/methodology/approach

To test the main hypotheses, the authors select 905 treated firms from the EU 28 + 2 countries for a difference-in-differences regression analysis of dependent variables from the Refinitiv ESG database.

Findings

The results suggest that the Directive influences sustainability reporting quantity and quality. Treated firms provide around 4 percentage points more sustainability information (i.e. availability) than propensity score matched control firms and are 19 percent more likely to receive external assurance (i.e. credibility). However, we also find that the Directive is not the decisive factor in the adoption of GRI guidelines (i.e. comparability).

Research limitations/implications

The analysis is restricted to large listed firms and does not account for small, mid-sized and private firms. Further, cross-cultural differences which influence sustainability reporting are controlled for but not investigated in detail. The authors derive several suggestions for future research related to the NFR Directive and its revision.

Practical implications

The authors’ findings have practical implications for the future development of sustainability reporting in the EU and for other regulators considering the adoption of sustainability reporting.

Originality/value

This study is the first to provide evidence on the NFR Directive's reporting effects across multiple countries. It adds to the growing literature on the consequences of mandatory sustainability reporting. Additionally, this paper introduces a novel measurement approach sustainability information quantity that could benefit researchers.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 1 May 2007

Shuchi Pahuja

To obtain opinions of Chartered Accountants (CAs) on the need for verifying environmental statements produced by a concern and desired status and qualifications of experts…

Abstract

Purpose

To obtain opinions of Chartered Accountants (CAs) on the need for verifying environmental statements produced by a concern and desired status and qualifications of experts doing such an audit. To examine EIA systems of large manufacturing companies operating in India.

Design/methodology/approach

Primary data collected by using two structured questionnaires: the first one to obtain opinions of CAs and the second one to examine EIA practices followed by the selected companies.

Findings

The users think that companies should produce duly verified environmental reports to increase credibility of these reports. They prefer appointment of a team of external duly qualified environmental auditors for this purpose. Majority of the sample companies prepare only statutorily required environmental statements. Most of these companies claim that they provide audited information in these statements verified generally by external environmental auditors.

Research limitations/implications

Some of the respondents gave incomplete answers for not disclosing their organizational policies because of perceived sensitive nature of environmental issues. Non‐manufacturing and small companies not included in the sample.

Practical implications

Make EIA mandatory at least in major polluting industries. An urgent need to develop standards covering the scope and limitations of third party EIAs was realised. Companies should also voluntarily try to provide audited environmental information in the annual reports to build credibility and trust among corporate stakeholders.

Originality/value

The paper presents empirical evidence from interviews with CAs and executives from the selected companies in India and provides insight into the need for EIA.

Details

Social Responsibility Journal, vol. 3 no. 2
Type: Research Article
ISSN: 1747-1117

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Article
Publication date: 7 April 2015

Sebastian Knebel and Peter Seele

The purpose of this paper is to examine the status of non-financial reporting according to the Global Reporting Initiative (GRI) 3.1 A+ standard. By examining the…

Abstract

Purpose

The purpose of this paper is to examine the status of non-financial reporting according to the Global Reporting Initiative (GRI) 3.1 A+ standard. By examining the comprehensiveness of the GRI performance in corporate non-financial reports classified as A+ the authors challenge the external assurance system imposed by GRI 3.1 A+ and discuss future directions for the application of GRI 4.0, particularly with regard to the standardized corporate reporting software language XBRL.

Design/methodology/approach

The authors applied a three-step-research design based on four literature-derived hypothesis and examined all 177 GRI 3.1 A+ reports (2012-13) by coding along 41 variables plus the 84 performance indicators of GRI 3.1 to test accessibility, ability to download, achievability, and the possibility to compare them to older reports.

Findings

The results indicate a lack of completeness of GRI’s 3.1 key performance indicators in A+ assured reports, that is made possible due to the reporting flexibility and voluntariness of the guideline. The authors find that the average of disclosed core indicators is 77.66 percent. Single A+ reports disclose even fewer GRI core indicators that B+ reports, which challenges the validity of the assurance system of GRI 3.1.

Research limitations/implications

In this study the (core) indicators were taken as given by GRI 3.1; the quality of the indicators was not measured or weighted.

Practical implications

Implications may emerge for redesigning non-financial reporting guidelines.

Social implications

By critically indicating possible weaknesses of the GRI 3.1 guidelines the authors aim to contribute to a more transparent and effective non-financial reporting.

Originality/value

As an increasing number of contributions criticize the credibility of non-financial reporting and also GRI’s role, the research for the first time provides empirical evidence of the shortcomings of CSR and sustainability reporting regarding comprehensiveness, accessibility, and comparability.

Details

Corporate Communications: An International Journal, vol. 20 no. 2
Type: Research Article
ISSN: 1356-3289

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Book part
Publication date: 21 October 2020

Annkatrin Mies and Peter Neergaard

In 2014, the European Union (EU) adopted the non-financial reporting Directive (2014/95/EU) making the disclosure of certain non-financial topics mandatory for large…

Abstract

In 2014, the European Union (EU) adopted the non-financial reporting Directive (2014/95/EU) making the disclosure of certain non-financial topics mandatory for large listed companies. They are required to report on policies, actions and outcomes regarding their environmental impact, social and employee matters, impact on human rights and corruption. Denmark introduced mandatory corporate social responsibility (CSR) reporting already in 2009, while Germany had no specific legislation on CSR reporting before 2017. Some authors allege that regulation positively impacts CSR reporting, while others argue that the voluntary nature of CSR reporting is essential (Romolini, Fissi, & Gori, 2014). Critics of mandatory reporting claim that non-financial reporting should develop bottom-up, as mandatory one-size-fits-all solutions are inappropriate given the differences among companies (ICC, 2015). The aim of this chapter is to evaluate the effect of legislation on reporting quality by comparing Denmark with a long tradition for mandatory reporting and Germany introducing mandatory rather recently. However, a rich body of literature exists on factors impacting CSR reporting other than legislation. These are among others: firm size, ownership structure, industrial sector and culture (Hahn & Kühnen, 2013.)

The chapter applies a content analysis of 150 CSR reports from German and Danish listed companies between 2008 and 2017 from four different industrial sectors. The chapter finds that mandatory reporting improves overall report quality by lifting the quality floor, yet, without lifting the quality ceiling. Size is important as improvements in reporting are largest in small and medium-sized companies. Companies in environmentally sensitive sectors tend to disclose more relevant environmental information than companies in less sensitive sectors. Both culture and ownership structure has a moderating effect on report quality.

Details

Governance and Sustainability
Type: Book
ISBN: 978-1-80043-151-5

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Article
Publication date: 5 October 2010

Yussri Sawani, Mustaffa Mohamed Zain and Faizah Darus

This paper aims to examine the development and evolution of sustainability reporting and assurance practices in Malaysia to identify the current practice and trend of…

Abstract

Purpose

This paper aims to examine the development and evolution of sustainability reporting and assurance practices in Malaysia to identify the current practice and trend of reporting and the level of awareness on assurance on sustainability reporting in Malaysia.

Design/methodology/approach

Interviews and questionnaire surveys were used to obtain respondents' perceptions on issues related to sustainability reporting and assurance practices among the ACCA‐MeSRA (Malaysian Environmental and Social Reporting Award) participants in 2007 coupled with content analysis of corporate annual reports and other standalone reports.

Findings

Results from the study provide evidence that most of the information relating to sustainability disclosure reported is integrated in the annual report and with no assurance statement due to low level of awareness and the absence of legislative pressure to commission the practice. The study indicates that companies applied selective reporting on issues relating to monetary contribution predominantly due to minority shareholders' insistence on better return for their investment.

Research limitations/implications

The nature of this study is exploratory and focuses on the evolution of sustainability reporting from the current state of corporate responsibility reporting and the availability of assurance practices in Malaysia. Findings in the study revealed several issues that require further analysis to identify significant factors that would influence sustainability reporting and assurance practices.

Practical implications

This study creates interest in the sustainability reporting and assurance practices in the Asian developing countries as its adaptation is far from developed.

Originality/value

This paper presents preliminary insights of the current trend and future direction of sustainability reporting and assurance in Malaysia.

Details

Social Responsibility Journal, vol. 6 no. 4
Type: Research Article
ISSN: 1747-1117

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Article
Publication date: 10 August 2010

Jui‐Chin Chang and Huey‐Lian Sun

The Sarbanes‐Oxley Act (SOX) mandated a variety of corporate governance mechanisms to improve the transparency of financial reporting quality. This paper's aim is to…

Abstract

Purpose

The Sarbanes‐Oxley Act (SOX) mandated a variety of corporate governance mechanisms to improve the transparency of financial reporting quality. This paper's aim is to investigate whether SOX's recently mandated disclosure of corporate governance structures affects the market's perception of earnings informativeness and firms' earnings management.

Design/methodology/approach

Since the first compliant disclosure of the Act would be found in firms' 2002‐2003 financial reports, the authors retrieve the post‐SOX data (pre‐SOX data) from the 2002 to 2003 (2001‐2002) period. Further, the study adopts Anderson et al.'s model to test the relations between earnings informativeness, audit committee independence, and other corporate governance variables. A similar mode is used by Chang and Sun in their study of cross‐listed foreign firms. To measure the discretionary accruals, the authors adopt Kothari et al.'s model and use the two‐digit SIC code in the cross‐sectional regression.

Findings

It is found that the market valuation of earnings surprises is significantly higher for firms which disclose stronger corporate governance functions. It is also found that the effectiveness of corporate governance in monitoring earnings management is improved after the mandated disclosure.

Originality/value

The empirical evidence shows that the quality of accounting earnings is increased after the SOX's mandated disclosure, which strengthens the link between financial reporting and corporate governance functions.

Details

Review of Accounting and Finance, vol. 9 no. 3
Type: Research Article
ISSN: 1475-7702

Keywords

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