Article

Credibility of sustainability reports: The contribution of audit committees

Details

Citation

Al-Shaer H & Zaman M (2018) Credibility of sustainability reports: The contribution of audit committees. Business Strategy and the Environment, 27 (7), pp. 973-986. https://doi.org/10.1002/bse.2046

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 issues 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 Four audit firm for sustainability 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.

Keywords
assurance; audit committees; corporate governance; resource dependency theory; sustainability

Journal
Business Strategy and the Environment: Volume 27, Issue 7

StatusPublished
FundersNewcastle University
Publication date30/11/2018
Publication date online28/02/2018
Date accepted by journal12/01/2018
ISSN0964-4733
eISSN1099-0836

People (1)

Professor Habiba Al-Shaer

Professor Habiba Al-Shaer

Professor in Accounting, Accounting & Finance