Abstract
PurposeThe purpose of this study is to extend existing knowledge on the determinants of sustainability report (SR) assurance practices. Four different theories – stakeholder theory, institutional theory, signaling theory and legitimacy theory – are used to formulate several hypotheses regarding the main factors that can influence a company’s decision to assure its SRs.Design/methodology/approachUsing a sample of 417 listed organizations based in different European countries over five years, the effects of stakeholder commitment, country orientation toward sustainability, firm environmental performance and business ethics controversies on the decision to assure SRs are assessed.FindingsThe results show that a company’s decision to assure its SRs is motivated by the need to maintain good relations with its stakeholders (which is in line with stakeholder theory and legitimacy theory), as well as by the willingness to signal their sustainability performance (which is in line with signaling theory) and to gain legitimacy. On the contrary, business ethics controversies do not seem to be relevant to a company’s assurance practices.Originality/valueThis paper provides new insights into the influence that social, environmental and institutional factors have on assurance strategies. New factors that previous research does not investigate – environmental performance, business ethics controversies and corporate governance – are tested. Factors that are already investigated in the literature are considered from an original perspective of introducing alternative measures (e.g. for the scope of national sustainability policies).
Highlights
In the past two decades, companies have been paying growing attention to environmental and social issues, and there has been substantial growth in research devoted to social and environmental accounting topics (Deegan et al, 2002; Kolk, 2008; Laine, 2010; McElroy and Baue, 2013; Siew, 2015; Domingues et al, 2017)
As sustainability is a complex and multivariate concept we use two separate variables to assess a company’s sustainability performance. We find that both social performances and environmental performances are positively associated with sustainability report (SR) assurance
To test H1, which predicts a relationship between stakeholder commitment and SR assurance, we focused on the Thomson Reuters DataStream ASSET4 database (Ioannou and Serafeim, 2012; Cheng et al, 2014), using the variable SOCSCORE in particular
Summary
In the past two decades, companies have been paying growing attention to environmental and social issues, and there has been substantial growth in research devoted to social and environmental accounting topics (Deegan et al, 2002; Kolk, 2008; Laine, 2010; McElroy and Baue, 2013; Siew, 2015; Domingues et al, 2017). The disclosure of non-financial information is part of. © Lorenzo Simoni, Laura Bini and Marco Bellucci. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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