Effects of social, environmental, and institutional factors on sustainability report assurance: evidence from European countries

Purpose The growing demand among stakeholders for credible sustainability information has spurred research in the field of sustainability report assurance practices. In this study, four different theories —stakeholder theory, institutional theory, signaling theory, and legitimacy theory— are used to formulate several hypotheses on the main factors that can influence a company’s decision to assure its sustainability reports. Design Using a sample of 414 listed organizations based in different European countries over five years, the effects of stakeholder commitment, country orientation towards sustainability, industry environmental sensitivity, GRI guidelines adoption, firm environmental performance, business ethics controversies and number of employees on the decision to assure the SR are assessed. Findings Results show that a company’s decision to assure its sustainability reports is motivated by the need to maintain good relations with stakeholders (which is in line with stakeholder theory and legitimacy theory), as well as by the willingness to signal their sustainability performance (which is in line with signaling theory). Moreover, the adoption of GRI standards seems to generate an isomorphic effect concerning external assurance. However, other institutional variables, like industry and national sustainability policies, do not affect a company’s assurance practices. Originality/value This research provides new insights on the influence that social, environmental, and institutional factors have on assurance strategies. New factors not previously investigated –environmental performance and business ethics controversies – are tested. Factors already investigated by the literature are considered under an original perspective of introducing alternative measures (e.g. for the scope of national sustainability policies).