Assurance Market Research Articles

The Impact of the Type of Cybersecurity Assurance Service and Cybersecurity Incidents on Investor Perceptions and Decisions

SUMMARY Regulators, investors, and boards of directors are increasingly demanding information about organizations’ cybersecurity risk management. I examine the effect of the AICPA’s voluntary cybersecurity examination service on investor perceptions and decisions. Similar to a previous AICPA IT-related assurance service called WebTrust that failed in the marketplace, cybersecurity examinations face competition from less comprehensive and less costly assurance services in a nonstandardized assurance market, and it is unclear whether investors will recognize the value provided by the more comprehensive assurance service. I find that investors are more willing to invest when management disclosures describe a cybersecurity examination compared with a less comprehensive assurance service but only if the assurance is in response to a cybersecurity incident. I also find that this effect is mediated by investor perceptions of assurance quality. I, however, do not find support for these same effects when the assurance is disclosed in the absence of an incident.

Compensation and carbon assurance: Evidence from the United Kingdom

This study investigates the influence of compensation on companies' decision to undertake carbon assurance. Using a sample of 1326 firm‐year observations from the United Kingdom between 2010 and 2018, this study finds that firms that include corporate sustainability incentive terms in executive compensation packages, firms that have higher director compensation and firms that have been involved in compensation controversies are more likely to undertake voluntary carbon assurance. Additional analyses show that the United Kingdom's mandatory greenhouse gas emissions reporting mandate, industry and gender diversity of the board of directors play significant moderating roles in the relationship between compensation and voluntary carbon assurance. The results of this study will help investors, managers and regulators better understand the factors that influence the growing carbon assurance market.

THE IMPACT OF SUSTAINABILITY ASSURANCE AND PERSONALITY CHARACTERISTICS ON INVESTMENT DECISION-MAKING IN SOCIAL RESPONSIBILITY INVESTING

Assurance reporting for non-financial information, such as sustainability reporting, is no longer guaranteed for quality, which led to differences in individual investors’ investment decision-making regarding social responsibility investing (SRI). This is mostly due to the report’s relative novelty and the unregulated nature of practices reported by the company. While professional accountants play a major role in the assurance market, other professionals also contribute to the overall proportions. Hence, this study endeavours to extend the literature on the type of assuror and the level of assurance by examining how they influence individual investment decision-making when they attempt to achieve the best environmental goals for their investment funds through the evaluation of environmental reporting assurance options. The goal of the study is to propose a conceptual model from the individual investors’ point of view, and evaluate the role of personal characteristics by using the Big Five Inventory (BFI) measurement as a possible moderator between the types of assurors and the level of assurance in decision-making.

Challenges of Mushroom Production in Assam

Mushroom has various advantages including high nutritional and functional value, therapeutic properties, nutraceutical value along with organoleptic worth besides its economic importance. Mushroom production is remunerative, fetch quick return and needs less investment and less infrastructure. Despite all these merits of Mushroom production the mushroom farmers many a times discontinue the venture or do not expand the enterprise. Studying the problems to understand the factors responsible for discontinuation of the venture and what deters to expand the venture would contribute in improving in entire ecosystem of production. Considering this, the present study on ‘Challenges of Mushroom production in Assam’ was conducted in Jorhat district using snow ball sampling method. Sample size for the study was 60. Problems in Mushroom production was studied in terms of the hindrance in mushroom production faced by the mushroom farmers. Altogether nineteen problem statements were prepared to explore the problems faced by the respondents in mushroom production. Based on the mean scores obtained by the respondents and standard deviation, respondents were categorized as low, medium and high level of problem. Ranking of the problem was done based on the mean score of the statements. The results reveal that around 60.00 per cent respondents faced medium level of problem. ‘Unavailability of quality spawn in mushroom Production’, ‘Lack of input’, ‘Lack of government scheme’, ‘Lack of assured market’, ‘Price fluctuation of the mushroom’ were some of the highly ranked problems reported by the respondents. The study concludes that there is an urgent need to remove the hindrances for accelerated adoption of mushroom enterprise for income generation in Assam.

Audit quality and independence concerns after major audit reforms within a developing country: stakeholder perceptions from Vietnam

PurposeThe purpose of this exploratory study is to investigate the perceptions of key stakeholders in Vietnam on the impact on audit quality and independence after major reforms to audit.Design/methodology/approachUsing new institutional sociology, this study seeks to explain how Vietnamese external auditors and accountants have responded to audit reforms and provides perceptions on how audit quality and independence may have been impacted. This study draws on semi-structured interviews conducted with 33 highly experienced participants, representing various stakeholder groups in Vietnam.FindingsThe findings indicate that after almost a decade since the full implementation of the Law of Independent Audit (2011) in Vietnam, the audit and assurance market in Vietnam is characterised by low quality audits, a lack of compliance with standards and auditor independence concerns, specifically amongst the smaller audit practitioners. Participants indicated that competition for new audit clients or retaining existing clients is a priority over improving audit quality and independence.Originality/valueBy examining a combination of different factors relating to audit quality and independence, the authors further demonstrate the impact of these factors in Vietnam, helping audit professionals and regulators to have a better and more meaningful understanding of that state of the audit profession. This study also considers audit concerns or issues arising because of the COVID-19 pandemic in Vietnam.

Is tenure important in the sustainability assurance context? An empirical analysis of the informative value of assurance statements

PurposeThis paper aims to examine the communicative value of assurance reports by investigating whether the impact on information asymmetries is contingent on the length of the contractual relationship between clients and assurance providers, which can compromise the provider’s independence.Design/methodology/approachUsing a firm-level data set of publicly listed international firms from 2007 to 2016, the authors estimate several regression models for panel data by using the generalized method of moments estimator to address the endogeneity issue.FindingsResults find that the greater the communicative value in assurance statements, the lower the information asymmetries. However, this effect is constrained when the assurance provider’s independence is compromised due to an excessively long-term contractual relationship. In other words, assurance statements with more informative value enhance the firm’s transparency and increase users’ confidence in the sustainability information provided. However, the loss of independence linked to longer tenure jeopardizes the communicative value of the assurance report and contributes to reducing information asymmetries.Originality/valueThe study makes at least three clear contributions to current literature. First, the authors contribute to the limited existing research about the communicative value attributed to assurance statements by stakeholders. Second, the authors indirectly contribute to the literature that analyses whether stakeholders understand the assurance report, a complex statement in a growing market. Addressing the communicative value of assurance is certainly a difficult task, as it is a novel and complex activity. Third, the main contribution is providing initial empirical evidence about the moderating effect that assurance provider tenure has in the relationship between the informational content of the assurance report and the level of information asymmetries. To date, there is no empirical evidence regarding the moderating effect of long assuror’s tenure as an important feature of the assurance market, and beyond that, regarding its impact on the communicative value assigned by stakeholders to assurance statements.

Exploring warehouse receipts financing for farmers through a case study

PurposeWarehouse receipt-based financing (WRF), an innovative instrument with its structure embedded in the agricultural value chain can potentially address farmers' concerns about timely credit access and accessible remunerative markets. However, studies indicate farmers' exclusion from currently practiced WRF mechanisms across developing countries. Transaction cost and lack of assured remunerative markets post storage are the challenges thwarting farmers' participation. The study explores how these challenges can be addressed by analyzing a case study. The finding will help in coming up with a farmer-inclusive WRF mechanism.Design/methodology/approachThe study uses a case study as an analysis tool. Primary data is gathered through farmers. Descriptive statistics and partial least squares (PLS) approach to structural equation modeling methodology has been adopted for empirical testing of the hypothesis of the study. The study uses SMART PLS 3.0 for analysis of data.FindingsSingle window offering of multiple value chain operations and technological intervention in physical handling substantially reduces transaction costs for farmers. Sustained farmers' participation in the case supports this finding. The presence of an assured market (PAM) is found to have a positive and significant relationship with WRF in the case of beneficiary farmers. The PAM is found to have a negative yet significant relationship with WRF in the case of nonbeneficiary farmers. Critical success factors of the entity KisanMitra stated in the case substantiates a farmer-inclusive WRF mechanism.Research limitations/implicationsThe study analyzes a case study of specific geography. However, similarities enlisted across developing countries in the introduction section provide a scope of generalization of findings across developing countries. The identified factors for a farmer-inclusive WRF mechanism will enable the governments, policymakers and development institutions to ascertain and align their WRF implementation measures to inculcate and upgrade these factors to the prospective WRF agents. Future studies can explore the replication of farmer-inclusive WRF mechanisms across other geographies. The studies also explores the role of technological interventions in further reducing the transaction cost and suitable policy modifications to encourage replication of the study in other geopgraphical context.Originality/valueThe study on WRF and the methodology adopted is first of its kind to identify factors for a farmer-inclusive WRF mechanism.

Research on the Influencing Factors of Carbon Assurance Disclosure Quality from The Perspective of External Audit Quality

To realize the goal of "carbon neutral", enterprises need to carry out the CDP carbon disclosure project and the independent audit carbon assurance under pressure from carbon regulation. Therefore, based on the external audit quality perspective, this paper examines the factors influencing the quality of carbon assurance that are important for the development of carbon assurance market business. Firstly, 58 listed companies with heavy carbon emissions in China are selected as the research objects, and the evaluation index system for DRS companies' carbon guarantee is established. Then, considering the volatility and conflicting properties of the indicators, we use the combination of weighting entropy and the CRITIC method, measuring the driving factor, response factor, and status factor of carbon assurance quality through the TOPSIS method. Moreover, this article establishes a weighted linear regression model to explore the premise of state-owned equity and the degree of portfolio leverage as control variables. Audit quality is significantly and positively correlated with carbon assurance. In addition, State ownership and DCL are positively and negatively correlated with carbon assurance quality, respectively. Finally, this paper puts forward relevant suggestions for accounting firms to develop a perfect carbon assurance process and improve the quality of carbon assurance.

Voluntary sustainability assurance in small and medium‐sized entities: The role of country origin in Europe

AbstractThe assurance of sustainability information by small and medium‐sized entities (SMEs) has not attracted much research interest to date. To rectify this, we draw on a sample of European firms (from the EU, the United Kingdom and Norway) extracted from the Global Reporting Initiative (GRI) database and explore the disclosure variable in relation to country‐specific factors. Assurance rates are found to be low among SMEs, and moreover, the level of disclosure is limited. The assurance market is dominated by accounting firms, above all by the Big Four. Legal origin is found to be a highly relevant factor, with Scandinavian countries presenting the highest percentage rates of sustainability report assurance. Among the cultural variables analysed, power distance, masculinity and uncertainty avoidance have a significant negative impact on the decision to assure sustainability information. Overall, the study serves to enhance understanding of SME practices in different countries of origin.

Tangled Tales of Mycelium and Architecture: Learning From Failure

Architects, artists and engineers around the world have been experimenting with the potential of mycelium, the vegetative body of a fungus, as a future building material for the past 15 years. It shares many of the positive material attributes of polystyrene but unlike the synthetic material it is fully sustainable and completely biodegradable. Mycelium has also proved to be simple to grow at scale. Its capacity to rapidly grow its tangled hyphae in a multiplicity of directions, digesting nothing more than organic waste, has shown promise for the production of a variety of materials for the building industry. But despite this, mycelium has struggled to find a market within the building industry. Drawing on the literature, this article argues that the challenges have been psychological, aesthetic and economic, rather than technical. Western industrial systems have conditioned us to expect material cultures to be clean, precise and durable. Mycelium is messy and some fungi are known pathogens. Like any living creature it can be unpredictable. Further, while the materials for growing mycelium are cheap, initial production costs for mass production and distribution typical of industrial fabrication are high. The risk for investors in the absence of an assured market stymied early forays into production. But as the environmental crisis becomes more urgent, there is evidence of a growing interest in finding new avenues for production. Centralised large-scale production is only one way forward. Another, which learns from early failures, is mass production through a multiplicity of micro-scale, do-it-yourself systems.

A snapshot of sustainability assurance market in New Zealand

PurposeThis study aims to provide a snapshot of voluntary sustainability assurance in New Zealand (NZ) in 2020. we assess the frequency of different assurance elements and discuss aspects of current practices that potentially contribute to the audit expectation gap. we also test whether the determinants of voluntary sustainability assurance in NZ are consistent with international findings.Design/methodology/approachFor 118 companies listed on the New Zealand Stock Exchange in 2020, we hand collected data on whether sustainability information was assured, subject matter assured, assurance level, outcome, provider, disclosure of detailed procedures, standard referenced and criteria applied. we then examine the influences of voluntary sustainability assurance using both univariate and regression analysis.FindingsApproximately 20% of listed companies that disclosed sustainability information provide a sustainability assurance report, indicating low levels of assurance compared to international practices. we note that the presence of different forms of assurance and certification, placement of sustainability information before financial statements and the associated audit report and mixture of assurance levels potentially contribute to the audit expectation gap. Further, voluntary sustainability assurance practices are diverse, and there are notable differences between Big Four accounting firms and other providers in terms of assurance level and standard referenced. Consistent with prior studies, we find size and industry classification as two main drivers of voluntary sustainability assurance.Originality/valueWe contribute NZ-specific insights to the sustainability assurance literature. The findings on voluntary sustainability assurance practices and reflection on the audit expectation gap are timely and relevant to the new climate-related disclosure mandate and pending assurance requirements.

Effect of COVID-19 pandemic on shrimp aquaculture in West Bengal, India

COVID-19 pandemic, caused by the SARS-CoV-2 virus, has adversely impacted every activity and all the sectors including aquaculture globally. Thousands of families of coastal West Bengal are directly or indirectly involved in shrimp farming for their employment and earn handsome income to sustain their lives and livelihoods. A survey was conducted among the stakeholders of the shrimp farming sector to assess the prospective effect of lockdown in all the parts of the shrimp aquaculture sector during both the summer crop and winter crop cultivation. As the strict lockdown norms were implemented during the summer crop so, the severe constraints during this culture were assessed in two phases (Phase I- 21st March to 30th April 2020 & Phase II- 1st May to 21st June 2020) using Garrett's Ranking Analysis and the constraints were ranked accordingly. The constraint of 'uncertainty over the culture and market' ranked 1st and the 'lack of quality seeds' ranked 1st in the 1st and 2nd phase of culture respectively. The uncertainty in the procurement of farming inputs, unavailability of specific pathogen-free (SPF) broodstocks & high health (HH) shrimp seeds, increased cost towards the cultivation, lack of manpower, absence of an assured international market, etc. have halted the shrimp farming operations noticeably. The farm input suppliers have also experienced supply chain disruptions due to lockdown. The Government of India permitted input supply and services in fisheries and aquaculture as an essential service to lessen the pandemic impact. Short-term policy measures are recommended for mitigation measures.

Accountability and quality assurance for leadership and governance in Dubai-based educational marketplace

PurposeOver the past decades, there has been an intensifying movement to privatize education in Western nations, with equal concern about the quality of education for all. This article adds to a global understanding of school inspections as a governance mechanism to promote educational quality in an entirely open K-12 educational marketplace.Design/methodology/approachThe role of school inspections as a quality assurance device is examined from a market accountability perspective. The Emirate of Dubai is used as an illustrative example of market accountability, where the educational landscape constitutes primarily a private open market.FindingsDubai proves that market accountability can address the needs of all families, assuring the provision of a sufficient quality standard of education, while allowing for competition to drive improvement. There are two lessons that Dubai offers a global audience that has been debating the merits of privatizing education: a fully free unregulated market does not promote an education system that provides a minimum standard of education for all; and a private education system can address stakeholder concerns and operate successfully in parallel to a public sector.Originality/valueThe idiosyncratic United Arab Emirates (UAE) education sector calls for a balance between flexibility and quality assurance across semi-independent jurisdictions. Hosting a majority of non-Emirati resident families, Dubai has developed a public inspection system for a private education market for quality assurance across 17 curricula offered in 215 private schools with diverse profit models. That most Dubai school-aged children are in private schools demanded accommodating an atypical landscape for K-12 education that affords insights into how a free market can operate. The authors encourage future research that may build a more comprehensive framework for better understanding the public–private education debate.

How does the EU non‐financial directive affect the assurance market?

AbstractThe objective of this paper was to determine the impact produced by Directive 2014/95/EU on companies’ decisions regarding the assurance of non‐financial information statements and the quality parameters under which this service is contracted. Following an analysis based on institutional theory, the results obtained for the reports issued by an international sample of 600 multinational companies in the period 2011–2018 show that the institutional pressures associated with this Directive contributed to an expansion of the assurance market, although they had only a moderate impact on the contractual conditions of the service. Complementary analyses suggest that the adoption of a limited scope in these assurance services may reflect the conservative outlook of auditors, as providers whose service is favoured in the new scenario. Additionally, we find that the influence of this legal framework is different in the United Kingdom from that in the other European countries. The research contributes to the literature by offering a novel understanding of the behaviour of assurance providers and of the quality of the service obtained.

Empirical Evidence of the Livelihood Vulnerability to Climate Change Impacts: A Case of Potato-Based Mountain Farming Systems in Bhutan

Potato (Solanum tuberosum) is an indispensable commodity, mainly cultivated by high-altitude mountain households, that sustains and supports the livelihood of an overwhelming 51% of the Bhutanese population. The popularity of potato cultivation among Bhutanese farmers can be attributed to the crop’s adaptability to a wide range of agroclimatic conditions such as a rainfed crop, high productivity, an assured market, and a reliable source of income for the farming families. We hypothesize that the changing climate would make the livelihood associated with potato cultivation in Bhutan more vulnerable. We tested this hypothesis to identify the sources of vulnerability of smallholder farming households using the Livelihood Vulnerability Index (LVI) and LVI-IPCC (Intergovernmental Panel on Climate Change) approaches in six potato growing districts of Bhutan: Bumthang, Chukha, Gasa, Mongar, Tashigang, and Wangdue. Primary data were generated through a semi structured sample survey of 240 households on the seven major livelihood components of sociodemographic profiles, livelihood strategies, social networks, health, food, water, natural disasters, and climate variability. The results showed that the LVI (range 0.302 to 0.375) and LVI-IPCC (range −0.005 to 0.030) differed significantly (p < 0.001) across the districts. The districts of Tashigang and Mongar were less vulnerable than the other four districts by the LVI approach, whereas Bumthang was also revealed to be less vulnerable using the LVI-IPCC approach. The degree of vulnerability in a district differed according to their level of exposure and adaptive capacity to the climate change impacts of the potato farming household. The results are expected to serve as empirical evidence for designing a future course of actions to mitigate the negative impacts.

Can Organic Agriculture Feed the Smallholders? Experience from Rural Bangladesh

This study empirically tests the benefit of the smallholders from organic farming in Bangladesh through their improved food security which is realised from their increased productivity and farm income. The respondent smallholders were picked up from two districts of Bangladesh namely Mymensingh and Bogra. The respondents (80) were the beneficiaries of the organic agriculture promotion project of Bangladesh Agricultural University. Three years data were collected by the project staff and were crosschecked with the base line. Findings of the study explored that before joining with the project extreme majority (93%) of the small farmers were involved in rice mono-culture and more than half (67%) of them were food deficit. The study also revealed that at the initial year of joining organic agriculture project their farm productivity was 10–12% lesser and it increased continually in the successive years. In some cases, it crossed the yield compared to conventional farming. The findings of the study showed that 100% of the farmers have followed crop diversification with high value vegetables and spices along with rice. Due to adoption of organic practices, the cost of production of the smallholders has declined from 27% to 36% and additionally they enjoy 10% to 15% premium prices which have enhanced their farm income significantly. The study shows that 62.5% of the smallholder farmers had attained household food security due to adoption of organic agriculture. Thus, adoption of organic agriculture effectively increased smallholders’ access to surplus safe food. However, the study also explored that farm size, extension media contact, access to assured market and access to institutional support are the most important factors in improving smallholders’ household food security through participation in organic agriculture programme. Thus, it can be concluded that organic agriculture can feed the smallholders in a better way.

Factors Affecting Shift from Paddy to Maize Cultivation in Punjab

Maize is one of the most suitable replacements of paddy in Punjab. The primary data for 2015-16 of paddy, maize, and wheat crop from five Punjab districts (Hoshiarpur, Jalandhar, Rupnagar, SAS Nagar and SBS Nagar) was collected from 300 sample farm households. The binary logistic model was constructed, and among the six most relevant explanatory variables availability of hired labour was found to be negative and significant statistically, whereas the educational level of decision maker was statistically nonsignificant. The participation in block-level camp/Kisan Mela/lecture attended by the decision maker was positive and significant statistically, and water availability on the diversified farm was negative and significant. Like the assured market and experience of the decision maker, the other variables were positive but non-significant. The farmers' non-diversification was found to be price instability, the menace of animals, lack of awareness regarding government programmes, non-availability of mechanisation for dehusking of the kernels.

I Spy with my UVEYE

An Israeli start-up has taken a system for detecting explosives underneath vehicles and re-designed it for the automotive quality assurance market. Tom Austin-Morgan reports.

Regional differences in industry specialization in the sustainability assurance market

PurposeThis paper uses institutional theory to analyze the structure of the sustainability assurance market (SAM) at a global level. The purpose of this paper is to determine if regional differences affect industry specialization in this market.Design/methodology/approachUsing a sample of 3,657 sustainability reports (SRs) with assurance statements, the authors study the global and regional specialization of assurers by breaking down the sample into three main regions. The authors approach industry specialization using previous methodologies applied to the financial audit market, and explain differences statistically significant among regions.FindingsThe authors find different industry specialists depending on the geographical region in which the audit firm is located. The Europe, Middle Eastern and Africa region has the highest number of industry specialists and the Asia-Pacific region the lowest. Notwithstanding the global participation of Big 4 firms, assurance specialization depends on the country where the company is located.Research limitations/implicationsThe paper reveals the need to include regional differences in the analysis of the SAM at the international level.Practical implicationsThe study shows an in-depth study of the SAM that may be useful for assurers, to decide strategic actions in industries and countries and for regulators, to control the risk of monopolistic/oligopolistic markets.Originality/valueThe study presents a novel approach to the analysis of the assurance market for SRs, by studying it from the supply point of view. The analysis provides a measure of specialization that may help understand the structure of the SAM.

A Provider’s Approach to the Assurance Market of Sustainability Reports in Spain

The assurance of sustainability reports faces significant challenges that arise from the characteristics of sustainability information and the regulatory context in which it is developed. This recently growing service has favoured the creation of a rapidly evolving market, a complex professional field in its early stages of development and study. The aim of this paper is to analyse whether the use of international standards or the profile of the provider performing the service affects assurance process and quality. To this end, we applied a novel methodology for this field: a survey through written questionnaires. The use of a primary information source allows us to gain insight into the topic, beyond other visible aspects often used in previous literature (e.g., assurance statement contents). We tested our hypotheses on a sample of Spanish accounting and consulting firms. Our results show that neither the use of international standards nor the provider’s professional background has any effect on assurance process and assurance quality. However, the way the professional perceives the developed service does have an impact on quality.