How do Investors Value Assurance on Corporate Social Responsibility (CSR) Reports? Evidence from European Listed Companies

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More and more companies are publishing CSR reports due to the growing interest of investors. Nonetheless, the quality of this information varies substantially across firms. Consequently, investors are demanding external verification of the content of CSR reports. This thesis examined how investors value the assurance and subsequent assurance-related decisions concerning the scope, level, provider and quality. Using data for 525 companies, the results indicate a significant positive influence of assurance on firm value. However, this relationship only holds when the reporting company is located in a country where CSR reporting remains voluntary. A significant negative relation is found between the scope of the assurance and firm value. Implying that assurance is preferred, but the costs involved should be limited. Furthermore, a significant positive relation is reported between the quality of assurance and firm value. No relationship is found for neither the level nor the provider of assurance on firm value. These findings show the importance of assurance for investors and the need for mandatory and enhanced regulation.
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