The influence of third-party assurance on sustainability reports on firm value
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2021-07-21
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en
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Abstract
Although sustainability reporting is a growing phenomenon, it is not accompanied by increased confidence among stakeholders since these reports are incomplete, inconsistent and lack credibility. Organizations communicate sustainability information with an increased credibility to their stakeholders by adopting third-party assurance on their sustainability performance in the absence of mandatory sustainability reporting standards and regulations.
This study investigates to what extent third-party assurance on sustainability reports influences firm value. In addition, it examines to what extent this effect is influenced by the quality of third-party assurance, sustainability performance, and/or country orientation. Using a panel data set with 365 listed organizations headquartered in Europe and North America for the period 2015–2020, the results show that third-party assurance on sustainability reports positively influences firm value. Moreover, a higher quality of third-party assurance increases firm value. This study finds no evidence of an effect of sustainability performance or country orientation on the relationship between third-party assurance and firm value. In addition, this study finds that superior sustainability performers select a higher quality and level of external assurance than inferior sustainability performers.
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Faculteit der Managementwetenschappen