Over the last several years, sustainable (or socially responsible) investing has experienced rapid growth around the world reflecting an increasing awareness by investors of social, environmental, ethical, and corporate governance issues. This heightened awareness among investors has resulted in a demand for sustainability reporting and a corresponding increase in demand for assurance of sustainability information to enhance its credibility. Using an investor-based view, we examine the impact of country-level investor protection on reporting companies' voluntary sustainability assurance decisions. We find that both the decision to obtain voluntary sustainability report assurance and the decision to obtain higher quality assurance are more likely for firms domiciled in countries that have weaker investor protection. Our results indicate that managers in low investor protection countries use voluntary sustainability assurance as a substitute monitoring mechanism.

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SYNOPSIS In this paper, we examine management's use of the “corporate/other” segment to mask the true performance of operating (or core) segments. The corporate/other segment represents firm-wide expenses not allocated to core segments. We find that managers take advantage of vague cost allocation requirements to shift expenses between the corporate/other segment and core segments. Specifically, in the presence of agency problems (i.e., transfer of resources to underperforming segments), our evidence is consistent with expenses being shifted from core segments to the corporate/other segment. This shifting increases the reported performance of underperforming core segments. In addition, when proprietary concerns are high (i.e., operations in less competitive industries), we find evidence consistent with corporate/other expenses being shifted to core segments. By shifting expenses to core segments, core profits are concealed when proprietary motives are present. Our research contributes to a growing literature on earnings manipulation through expense shifting (rather than accrual manipulation or real activities management). Data Availability: The authors are willing to share the data upon request.

As sustainability reporting becomes more commonplace, it is important to understand the factors that influence firms’ voluntary reporting decisions. This exploratory study examines whether board independence affects the sustainability reporting decisions of the 500 largest firms in the United States. We also investigate other factors that may be associated with sustainability reporting, including environmental performance and reputation. We find that<br />firms with a greater proportion of independent board members are: 1) more likely to publish standalone sustainability reports, and 2) more likely to publish higher quality sustainability reports. This paper contributes to prior literature that reports somewhat mixed results on the effect of board independence on voluntary disclosure.