The impact of companies’ trust-building efforts on sustainability reporting assurance quality: insights from Europe

Joanna Krasodomska, Ewelina Zarzycka, Donna L. Street and Wojciech Grabowski

Meditari Accountancy Research, 2025, vol. 33, issue 7, 246-279

Abstract: Purpose - This study aims to identify whether European listed companies’ trust-building efforts are associated with their sustainability reporting assurance decisions, regarded as signals of trust. Design/methodology/approach - The authors differentiate three sources of trust (performance, reputation and appearance) and conceptualise assurance quality as determined by the type of assurance provider, the scope of assurance and the assurance level. The sample covers sustainability reports published from 2018 through 2021 by 859 listed companies from 20 European countries. The total number of observations is 3,436. To capture companies’ trust-building efforts, the authors use data from the LSEG ESG Data and Analytics. They empirically analyse the data with a multidimensional discrete choice model. Findings - The findings indicate that companies that attempt to build trust with sustainability-related performance are more likely to obtain external assurance for their sustainability reports and obtain higher quality assurance. The use of sustainability reporting in trust-building efforts is positively associated with the scope of assurance. Interestingly, companies prioritising reputation as a source of trust are less likely to use accounting firms as assurance providers. Additionally, company size, business sector and common-law system significantly influence the assurance decision and certain aspects of assurance quality. Originality/value - The study’s findings suggest that to motivate higher quality assurance regulators from jurisdictions outside the European Union (EU) could consider taking legal action as well as focus on efforts aimed at improving companies’ sustainability performance.

Keywords: Assurance quality; Trust; Trustworthiness; Sustainability reporting assurance; Corporate Sustainability Reporting Directive; Signalling theory (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:medarp:medar-05-2024-2496

DOI: 10.1108/MEDAR-05-2024-2496

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