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Credibility of sustainability reports: The contribution of audit committees

Al-Shaer, Habiba; Zaman, Mahbub

Authors

Habiba Al-Shaer



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.

Citation

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

Journal Article Type Article
Acceptance Date Jan 12, 2018
Online Publication Date Feb 28, 2018
Publication Date Nov 1, 2018
Deposit Date Mar 22, 2018
Publicly Available Date Feb 29, 2020
Journal Business Strategy and the Environment
Print ISSN 0964-4733
Electronic ISSN 1099-0836
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 27
Issue 7
Pages 973-986
DOI https://doi.org/10.1002/bse.2046
Keywords Sustainability; Audit committees; Assurance
Public URL https://hull-repository.worktribe.com/output/751651
Publisher URL https://onlinelibrary.wiley.com/doi/full/10.1002/bse.2046

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