The effects of types of sustainability assurance on firm value
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2023-07-06
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en
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The Corporate Sustainability Reporting Directive (CSRD) aims to regulate sustainability report disclosure and assurance by 2026 to enhance companies' commitment to sustainability and drive long-term sustainable change in the EU. However, the possibility of greenwashing persists due to the flexibility provided to companies in choosing their assurance provider, scope, and level of assurance. To highlight the implications for firms and regulators, this study examines the effect of different types of sustainability assurance on firm value.
Using a panel dataset of 10,331 firm-year observations of listed companies from 2009 to 2019, the results show that companies opting for an assurance provider in the auditing profession and a broader assurance scope have lower firm value compared to those choosing lower quality assurance options. Results also show that firms with higher corporate sustainability performance (CSP) moderate the negative effect of choosing a higher quality form of assurance. The findings counter the idea that signaling greater assurance effort leads to an increase in firm value and instead emphasize the importance of actual CSP in driving long-term financial performance.
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Faculteit der Managementwetenschappen