The Value of Assurance on Voluntary Nonfinancial Disclosure: An Experimental Evaluation

Coram, Paul; Monroe, Gary S.; Woodliff, David

doi:10.2308/aud.2009.28.1.137

Cited by 163 publications

(152 citation statements)

References 22 publications

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“…Several experimental studies consistently found a positive effect of sustainability assurance on the perceived reliability of the respective information for report users (BrownLiburd & Zamora, 2015;Hodge, Subramaniam, & Stewart, 2009;Pflugrath, Roebuck, & Simnett, 2011). This effect, however, seems to be context-specific and more pronounced when sustainability-related performance is positive (Brown-Liburd & Zamora, 2015;Coram, Monroe, & Woodliff, 2009). Ultimately, such increased perceived reliability and credibility can even translate into higher stock price estimates (Coram et al, 2009).…”

Section: Literaturementioning

confidence: 96%

“…This effect, however, seems to be context-specific and more pronounced when sustainability-related performance is positive (Brown-Liburd & Zamora, 2015;Coram, Monroe, & Woodliff, 2009). Ultimately, such increased perceived reliability and credibility can even translate into higher stock price estimates (Coram et al, 2009). Experimental research on integrated reporting, however, is still very scarce.…”

Section: Literaturementioning

confidence: 99%

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Integrated Reporting and Assurance of Sustainability Information: An Experimental Study on Professional Investors’ Information Processing

Reimsbach

Hahn

Gürtürk

2017

European Accounting Review

212

199

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Sustainability-related non-financial information is increasingly deemed value relevant. Against this background, two recent trends in non-financial reporting are frequently discussed: integrated reporting and assurance of sustainability information. Using an established framework of information acquisition, evaluation, and weighting, this experimental study investigated how the choice of reporting format interacts with the voluntary assurance of sustainability information. The results from a sample of professional investors underline the important role of assurance in the context of voluntary disclosure and illustrate the relevant interaction with the reporting format. Assurance of sustainability information positively affected professional investors' evaluation of a firm's sustainability performance, resulted in a higher weighting of this information, and led to higher investment-related judgments. However, this assurance effect was weaker in the case of integrated reporting compared to separate reporting. We attribute this effect to a cognitive bias in decision making when assured financial performance and non-assured sustainability performance are presented in the same report.

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Section: Literaturementioning

confidence: 96%

Section: Literaturementioning

confidence: 99%

Integrated Reporting and Assurance of Sustainability Information: An Experimental Study on Professional Investors’ Information Processing

Reimsbach

Hahn

Gürtürk

2017

European Accounting Review

212

199

View full text Add to dashboard Cite

show abstract

“…According to Bagnoli et al [52], by means of the assurance process, managers determine ex ante their level of social responsibility, entrusting the assurer with the certification of the actual level achieved. Via these activities, managers aim to eliminate negative perceptions, for example arising from greenwashing, thus reinforcing the confidence and loyalty of shareholders [44,53].…”

Section: Literature Reviewmentioning

confidence: 99%

Directive 2014/95/EU: Are Italian Companies Already Compliant?

et al. 2017

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According to Directive 2014/95/EU on disclosure of non-financial information from 2017 onwards, large companies (exceeding 500 employees) headquartered in Member States will be required to provide a series of social, environmental, and governance statements. The Directive was transposed into Italian law by Legislative Decree 254 of 30 December 2016.The aim of this paper is to evaluate the information gap for Italian companies and, consequently, the adjustments required by the new Directive on non-financial information. In order to analyze the level of non-financial and diversity disclosure, we created an assessment model called "Non-financial information score", which records the required information as a percentage. We apply it to a sample of 223 large companies. The results (with an average NFI score of about 49%) show that, in spite of what has previously emerged in the European debate about the application of the Directive on the part of large companies, an information gap remains, although the implementation of the directive should help to fill it in the coming years. In this sense, the potential contribution of the EU directive to non-financial disclosure in Italy appears to be greater than we had expected. Thus, in accordance with the literature, this paper appears to confirm the role of regulation in improving the quality of disclosure of non-financial information.

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“…As mentioned in Section 2, non-financial disclosure is increasingly relevant for auditors and accountants for their decision-making processes [69]. We argue that higher levels of ICD should reduce the level of the audit risk, as auditors have more information as basis for their evaluations, due to the firms' propensity to be more transparent [7,70].…”

Section: Hypotheses and Research Questionsmentioning

confidence: 99%

Does Intellectual Capital Disclosure Matter for Audit Risk? Evidence from the UK and Italy

Demartini

Trucco

2016

Sustainability

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Disclosure theory argues that better information quality reduces audit risk, by decreasing information asymmetry in the market and consequently, information risk for firms. Extant literature on voluntary disclosure analyzes the relationships between Corporate Social Responsibility (CSR) and audit risk, finding that auditors charge lower fees and issue less going concern opinions to firms with good CSR performance. In this study, we test the relationship between intellectual capital disclosure (ICD) and audit risk and we assess the effect of ICD and audit risk on audit fees. To do so, we use data from the ESG Asset4 database (Thomson Reuters Datastream) on 166 UK and 27 Italian listed firms that issue stand-alone social and intellectual capital statements. The audit risk is measured from both a qualitative and a quantitative perspective. Panel data analysis on 2004-2011 years has been used to test our research hypotheses. Empirical findings from a sample of UK and Italian listed companies show that auditors estimate a lower qualitative risk, albeit a higher quantitative one, for those companies reporting higher ICD scores, compared to those ones with lower disclosure scores on the intellectual capital. Furthermore, we find that reputation risk contributes to the relationship between ICD and audit risk.

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The Value of Assurance on Voluntary Nonfinancial Disclosure: An Experimental Evaluation

Cited by 163 publications

References 22 publications

Integrated Reporting and Assurance of Sustainability Information: An Experimental Study on Professional Investors’ Information Processing

Integrated Reporting and Assurance of Sustainability Information: An Experimental Study on Professional Investors’ Information Processing

Directive 2014/95/EU: Are Italian Companies Already Compliant?

Does Intellectual Capital Disclosure Matter for Audit Risk? Evidence from the UK and Italy

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