Choice of Assurance Provider and Impact on Quality of Sustainability Reporting: Evidence from Sustainability Reporting Restatements

AbstractUsing data from 32 countries, we identify the determinants of assurance provider type (accounting firm versus non‐accounting firm) and examine whether assurance provider type is associated with sustainability reporting quality. We measure sustainability reporting quality via changes in metrics made to sustainability reports from the prior year and restatements to correct errors in previously issued sustainability reports. We find that accounting firm assurers are positively associated with changes in metrics and restatements of prior period errors. We also examine the association between assurance and the application level of Global Reporting Initiative (GRI) guidelines used to prepare the sustainability report. Both accounting and non‐accounting firm providers are associated with higher GRI application levels and increases in GRI application level. Together, these results suggest that non‐accounting firms focus more on the quantity of disclosures, while accounting firms emphasise both the quality and quantity of disclosures in sustainability reports in accordance with the GRI Reporting Framework. Among accounting firm providers, we find little difference in sustainability reporting quality between accounting firm assurers that do versus do not audit the financial statements. The results of this study provide important insights for practitioners and standard‐setters as to the value of sustainability assurance and the relative benefits of engaging accounting versus non‐accounting assurance providers.