Determinants and Value Relevance of Voluntary Assurance of Sustainability Reports in a Mandatory Reporting Context: Evidence from Europe

Heidi Vander Bauwhede () and Philippe Van Cauwenberge
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Heidi Vander Bauwhede: Department of Accounting, Corporate Finance and Taxation, Faculty of Economics and Business Administration, Ghent University, Sint-Pietersplein 7, 9000 Ghent, Belgium
Philippe Van Cauwenberge: Department of Accounting, Corporate Finance and Taxation, Faculty of Economics and Business Administration, Ghent University, Sint-Pietersplein 7, 9000 Ghent, Belgium

Sustainability, 2022, vol. 14, issue 15, 1-14

Abstract: This paper investigates the determinants of sustainability report (SR) assurance and whether this assurance is value relevant within the context of the European Union (EU), where, under the Non-Financial Reporting Directive (NFRD), sustainability reporting is mandatory for large public interest entities (PIE) as of fiscal year 2017. Using a sample of 1832 firm-year observations from 660 European listed companies over the period 2017–2020, the results of a logistic regression analysis indicate that firm size, environmental, social and governance (ESG) performance and industry affiliation are important drivers of the demand for SR assurance. The value relevance regressions suggest that SR assurance is positively associated with the stock market value. The study contributes to the existing knowledge on SR assurance by documenting its determinants and value relevance in a context where sustainability reporting is mandatory and that is predominantly stakeholder-oriented. The results may be of interest to companies that consider to adopt SR assurance in such a context and to the European Commission (EC), which has included a mandatory SR assurance requirement in the proposed Corporate Sustainability Reporting Directive (CSRD), the successor to the NFRD.

Keywords: sustainability reporting; sustainability report assurance; value relevance; firm value (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:15:p:9795-:d:883380

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