Search results

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 paper aims to investigate the current state of knowledge in key reporting aspects in relation to sustainability reporting in general and to reflect on their relevance to Global Reporting Initiative (GRI) in particular. In doing so, the major gaps in that knowledge are identified, and the paper proceeds to suggest further research avenues.

The authors conduct a review of papers published in leading journals concerning sustainability reporting to analyse the progress in the literature regarding three important reporting topics: materiality, comparability and assurance.

The review conducted in this study shows that there is still work to be done to ensure high-quality and consistent sustainability reporting. Key takeaways from the review of the extant literature are as follows: there is ongoing debate about the nature of sustainability reporting materiality, and single versus double materiality. Clearer guidance and better contextualisation are seen as essential for comparability, and, as GRI suggests, there is an important link to materiality that needs to be considered. Finally, assurance has not been mandatory under the GRI, but the current development at EU level might lead to the GRI principles being incorporated in the primary assurance standards.

In this paper, the authors review and synthesise the previous literature on GRI reporting dealing with three key reporting aspects.

The authors extract some takeaways from the literature on materiality, comparability and assurance that will all be key challenges for GRI in the future.

This paper provides an updated review of the literature on GRI reporting dealing with three key reporting aspects.

This paper aims to examine the effect of corporate integrity and external assurance on Sustainability Reporting Quality (SRQ) of Malaysian public listed companies.

The study uses a longitudinal sample of 2,463 firm-year observations of non-financial firms listed on the main board of Bursa Malaysia from 2015 to 2019. The study employed panel regression that is, Fixed Effect (FE) Robust Standard Error estimation technique to test its hypotheses.

The panel regression results reveal that corporate integrity and external assurance positively and significantly influence the quality of sustainability reporting. Though the positive association shows an improvement in the SRQ of the sampled firms, it needs an improvement as the disclosure is more general and qualitative than quantitative. The present improvement in SRQ might result from some regulatory changes like the Sustainability Practice Note 9 Updates of Bursa Malaysia 2017 and the Revised MCCG Principle A to C within the same period.

The study adopts a purely quantitative approach and call for a qualitative investigation in the area in the future.

The study has policy implication for the government and regulators to strengthen compliance with the sustainability reporting guide and the Practice Note 9 Updates. It also has implication for corporate integrity and external assurance for companies, to enhance SRQ and achieve sustainable development.

The study bridged literature gaps by offering new insights and empirical evidence on the role of corporate integrity in SRQ, which has received no empirical attention in the Malaysian context.

This study aims to investigate the influence of organisations’ board gender diversity on the adoption of the United Nations sustainable development goals (SDGs) and on the use of external assurance.

The paper combines data from the Global Reporting Initiative’s Sustainability Disclosure Database and the Orbis database from Bureau van Dijk. The study uses logit models based on a sample of 366 large Asian and African companies which have addressed the SDGs in their sustainability reports published in 2017.

The results reveal that board gender diversity is positively associated with sustainability reporting and the involvement of an external assurance provider.

This study adds to the growing literature on the relationship between women’s participation on corporate boards and SDG reporting. Additionally, it addresses the understudied question of how the gender diversity of board resources affects the adoption of the external assurance of sustainability reporting.

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.

This research complements the corporate reporting literature by exploring the different types of assurance, which companies are using to bolster the credibility of their integrated and sustainability reports. A composite quality measure is proposed and this study aims to provide evidence on how combined assurance quality (CAQ) varies among firms.

Content analysis is used to identify “elements” of combined assurance disclosed in integrated and sustainability reports and company webpages. Results are presented in tabular format and supported by non-parametric tests to evaluate differences in CAQ among firms in more detail.

Combined assurance is framed as a function of the responsibility of the board of directors to ensure accurate, complete and reliable reporting and the characteristics of different internal and external sources of assurance. Overall, combined assurance models are being designed conservatively. They focus mainly on specific disclosures and are guided by a limited number of assurance methodologies or frameworks instead of taking a more pluralistic approach to verification of integrated and sustainability reports as a whole.

The study is based on combined assurance practices by a sample of large listed companies in a single jurisdiction. An international comparison of combined assurance and the calibration of the proposed quality measure is deferred for future research.

Limitations in existing assurance practices are identified for the consideration of preparers and assurance providers. The quality schematic also offers practitioners, standard-setters and academics an easy-to-apply technique for examining the different elements of a company’s combined assurance model.

A better understanding of the quality of combined assurance is essential for users’ to place reliance on integrated and sustainability reports and for informing change to existing assurance practices.

The study is the first to examine the operation and quality of combined assurance. The method used to gauge assurance quality provides a useful basis for a more detailed empirical study on the relevance of combined assurance.

This paper aims to investigate the relationship between corporate reporting on issues related to the Sustainable Development Goals (SDG) and the quality of non-financial information (NFI) corroborated by different types of assurors.

The study methods used include logistic regressions, focusing on data for Spanish listed companies in 2017–2018.

Analysis shows that companies are more likely to report SDG-related performance when their sustainability report is assured. This association remains constant irrespective of the nature of the assurance, which only became mandatory in Spain following the entry into force of Act 11/2018 in this respect. Moreover, companies that hire KPMG or PwC (two of the big four accounting firms) as assurance providers are more likely to report SDG-related performance than those that hire non-accounting firms. Finally, companies with higher quality assurance statements are more likely to address SDG-related matters.

The authors believe the findings reported in this paper will help decision-makers better understand the quality of organisations’ contributions towards achieving the SDGs. Furthermore, this paper has implications for stakeholders, policymakers, academics and assurance providers concerning the relationship between SDG-related reporting and the quality of NFI.

To the best of the authors’ knowledge, no prior research has been undertaken to analyse the relationship between SDG-related company reporting and the assurance of NFI.

This paper aims to investigate the potential influence of managers on sustainability assurance. When the quality of sustainability reporting is questionable because of subsequent restatements, the authors explore whether assurance is used to enhance its credibility as a legitimization tool or as an impression management strategy. Additionally, the authors analyze how capital markets react to this potential managerial capture and, particularly, whether investors penalize this practice through the cost of capital.

Using an international sample from 2012 to 2016 and panel data regressions, this study relies on DICTION’s master variables of optimism and certainty to examine the impact of managers on assurance and the market’s reaction to these practices.

The study shows that some managers might use assurance as a legitimization tool rather than as a means of reinforcing the credibility of sustainability reporting. In such cases, the results reveal that investors penalize (reward) managerial influence (no influence) on assurance.

The new findings help companies understand that they will not improve their financing terms if investors perceive that managers have influenced assurance. Moreover, these findings emphasize the need for standardization to clarify assurance criteria and prevent managerial influence.

Managerial influence on assurance raises doubts about its value in terms of reducing information asymmetry and especially improving investors’ decision-making.

The present study represents the first evidence of the potential use of assurance for non-informative purposes. The authors provide clear evidence of how investors penalize managerial influence on assurance, in contrast to the mainstream literature, which shows that this practice always improves investors’ decision-making and is rewarded.

This paper aims to investigate the relationship between sustainability reporting and firm value, and subsequently, ascertains the moderating effect of assurance and the type of assurer on the sustainability reporting–firm value nexus.

The study is based on sample firms from the Johannesburg Stock Exchange (JSE) in South Africa. The fixed‐effect panel data analysis method is used to estimate the coefficients of the variables.

A significant positive relationship is found between sustainability reporting and firm value. The results also suggest that sustainability assurance has significant explanatory power on firm value. Furthermore, the authors found that the market is unable to distinguish between sustainability assurance services provided by Big 4 audit firms and specialist consultant firms.

The authors expect managers will see sustainability reporting and assurance as a business strategy with incremental market value. The study should also serve as a reference for stakeholders engaged in the advocacy for the adoption of sustainability assurance practices on the JSE and other emerging markets.

The study finds that the South African market rewards firms that purchase third-party assurance to guarantee the integrity of their corporate social responsibility reports. This understanding could help encourage more firms to embrace the concept of sustainability assurance.

The study offers a first-hand information on how market participants in Johannesburg, an emerging economy, view sustainability assurance and the services provided by the different assurers.

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.

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?

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.

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.

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.

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.