The engagement of auditors in the reporting of corporate social responsibility information

Pucheta‐Martínez, María Consuelo; Bel‐Oms, Inmaculada; Rodrigues, Lúcia Lima

doi:10.1002/csr.1656

Cited by 39 publications

(29 citation statements)

References 53 publications

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“…Moreover, when audit fees are lower, the BOD_index is significantly and negatively associated with REM (see Models 4.9 and 4.10) and significantly and positively associated with the FRQ_index (see Model 4.12), suggesting that, when audit effort is lower, the strength of the board plays a significant role in monitoring managers' opportunistic behaviour and improving the post‐audit firm's financial reporting quality. Companies with strong governance have lower audit risk and thus pay lower audit fees because auditors are expected to put less effort into reviewing their financial statements (Pucheta‐Martínez et al, 2019).…”

Section: Resultsmentioning

confidence: 99%

“…Companies disclose information to reduce information asymmetry between stakeholders and help managers make decisions (Frias‐Aceituno, Rodríguez‐Ariza, & Garcia‐Sánchez, 2014; Martínez‐Ferrero et al, 2015). Shareholders might acquire control mechanisms for monitoring managers' behaviour, such as external auditors, in order to reduce agency costs, because their opinions are independent of the firm (Pucheta‐Martínez, Bel‐Oms, & Rodrigues, 2019). Increasing attention is being paid to the need for auditors to consider other information attached to, or intended to be read with, the financial statement as part of their risk‐assessment practices (Simnett & Huggins, 2014).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

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Sustainability reporting quality and post‐audit financial reporting quality: Empirical evidence from the UK

Al‐Shaer

2020

Bus Strat Env

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This study examines whether firms that appear to exhibit high sustainability reporting quality are less likely to engage in earnings management activities, thereby delivering financial information that is more transparent and reliable than that delivered by firms that do not produce high‐quality sustainability reports. I also investigate whether the association between sustainability reporting quality and post‐audit financial reporting quality is conditional on audit effort. Analysis of data drawn from FTSE 350 companies covering 2007 to 2018 indicates that firms that produce high‐quality sustainability reports are significantly and negatively associated with earnings management metrics. More importantly, this association is moderated by audit effort, measured by audit fees, suggesting that sustainability reporting quality reflects factors considered by auditors in their audit risk assessment practices. These results remain robust after several sensitivity analyses. I conclude that firms that devote more resources to producing high‐quality sustainability reports are likely to demonstrate an overall commitment to quality that alleviates auditors' concerns about the opportunistic use of sustainability reporting and reduces business risk, thereby reducing the effort auditors expend to verify financial reports.

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Section: Resultsmentioning

confidence: 99%

Section: Hypothesis Developmentmentioning

confidence: 99%

Sustainability reporting quality and post‐audit financial reporting quality: Empirical evidence from the UK

Al‐Shaer

2020

Bus Strat Env

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“…Thus, large auditing firms motivate their clients to follow mandatory disclosure rules and disclose more comprehensive relevant information than that required to reserve their reputations (Firth, 1979). Most prior studies found a significant relationship between large auditing firms and higher corporate disclosure levels (Haniffa and Cooke, 2002;Orazalin and Mahmood, 2018;Pucheta-Martínez et al, 2019). Sierra et al (2013) concluded that the decision to issue CSR disclosures depends on whether financial reports are audited by Big Four or not.…”

Section: Auditor Type and Sustainability Reportingmentioning

confidence: 99%

Determinants of GRI-based sustainability reporting: evidence from an emerging economy

Orazalin

Mahmood

2019

JAEE

107

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Purpose The purpose of this paper is to investigate the extent and determinants of sustainability performance disclosures reported by publicly traded companies in Kazakhstan by using the Global Reporting Initiative (GRI) framework. Among the different possible determinants, stand-alone sustainability reporting (SR), reporting language, leverage, cash flow capacity, profitability, size, age and auditor type were selected to investigate their impacts on the quality and scope of sustainability information. Design/methodology/approach The study analyzes data from publicly traded companies at the Kazakhstani Stock Exchange for the years 2013–2015. To investigate the extent, nature and quality of sustainability reports, the study measures and analyzes economic, environmental and social performance parameters, as suggested in the GRI guidelines. Findings The results indicate that determinants such as stand-alone reporting, reporting language, firm profitability, firm size and auditor type substantially influence the extent, nature and quality of sustainability-reporting practices of Kazakhstani companies. Practical implications The findings of the study suggest that managers, practitioners, regulators and policy makers in emerging economies should adopt the GRI guidelines to report sustainability performance disclosures and focus on specific factors to improve the quality of sustainability disclosures. Originality/value This study is one of the first studies to investigate the extent, nature and possible determinants of corporate SR in central Asian-emerging economies.

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“…Eccles, Perkins, and Serafeim () indicate that firms that emphasize sustainable practices over the long term outperform firms that do not. Pucheta‐Martínez, Bel‐Oms, and Rodrigues () provide evidence that when large audit firms are engaged in financial statement audits, there is an increase in CSR disclosures. Although restricted to Spanish firms, they argue for a relationship between financial audits and the quality of CSR information.…”

Section: Theoretical Background and Hypotheses Developmentmentioning

confidence: 99%

The impact of internal control, external assurance, and integrated reports on market value

Gal

Akisik

2019

Corp Soc Responsibility Env

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It is generally assumed that the credibility of a firm's disclosure is enhanced when there is an independent review. This is the basis for the requirement that an independent audit firm attest to the veracity of financial statements. With the passage of Sarbanes-Oxley, publicly-traded North American firms must include a statement about the quality of their internal control system in their financial statements. While the audit of the statements of financial position may be considered to pertain only to that information, the internal control system has a pervasive effect.

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The engagement of auditors in the reporting of corporate social responsibility information

Cited by 39 publications

References 53 publications

Sustainability reporting quality and post‐audit financial reporting quality: Empirical evidence from the UK

Sustainability reporting quality and post‐audit financial reporting quality: Empirical evidence from the UK

Determinants of GRI-based sustainability reporting: evidence from an emerging economy

The impact of internal control, external assurance, and integrated reports on market value

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