Corporate Sustainability and Financial Performance as Determinants of Sustainability Assurance Choices
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2025-07-02
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en
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In response to growing stakeholder expectations and the increasing prominence of sustainability reporting, companies seek to enhance the credibility of their disclosures through external assurance. However, companies have broad discretion in how they obtain such assurance, leading to variation in assurance practices regarding scope, level, and provider type. The aim of this study is to contribute to the understanding of the variation in companies’ sustainability assurance decisions by examining how these choices may be associated with both corporate sustainability performance (CSP) and corporate financial performance (CFP). Drawing on a panel dataset of 2,107 firm-year observations from listed companies in 38 countries between 2019 and 2023, the study analyses the relationship between CSP, CFP, and firms’ selection of assurance scope (broad or narrow), assurance level (limited, reasonable, or hybrid), and assurance provider (Big Four or non-Big Four). The results indicate that firms with higher market-based financial performance are more likely to engage a Big Four provider, providing support in favour of legitimacy theory. No associations are found between CFP and the adoption of broad assurance scope, or reasonable and hybrid assurance levels. This suggests that financial performance is not a driver of more costly assurance decisions.
Keywords: Sustainability assurance, Assurance choices, Big Four accounting firm, Legitimacy theory, CSP, CFP
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Faculteit der Managementwetenschappen