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Credibility of sustainability reports: The contribution of audit committees

Lookup NU author(s): Professor Habiba Al-ShaerORCiD

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This is the authors' accepted manuscript of an article that has been published in its final definitive form by John Wiley & Sons Ltd., 2018.

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Abstract

Concerns about the credibility of sustainability reports can be mitigated through assurance. Although audit committee remit encompasses monitoring of sustainability issues, there are potential complementary and substitution between governance mechanisms. This paper explores the relationship between audit committees and sustainability reporting assurance using resource dependency theory. We find audit committee characteristics have an impact, additional to that of the board of directors and the existence of sustainability committees, on voluntary sustainability assurance. Our results also show that audit committee independence is associated with use of a Big 4 audit firm for sustainability reporting assurance. A negative association between sustainability committees and assurance however indicates assurance could be a burden for small firms. Overall, the findings suggest audit committees add credibility and help improve sustainability reporting through their independence, expertise, and oversight.

Publication metadata

Author(s): Al-Shaer H, Zaman M

Publication type: Article

Publication status: Published

Journal: Business Strategy and the Environment

Year: 2018

Volume: 27

Issue: 7

Pages: 973-986

Print publication date: 01/11/2018

Online publication date: 28/02/2018

Acceptance date: 12/01/2018

Date deposited: 22/01/2018

ISSN (print): 0964-4733

ISSN (electronic): 1099-0836

Publisher: John Wiley & Sons Ltd.

URL: https://doi.org/10.1002/bse.2046

DOI: 10.1002/bse.2046

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