Effects of Social, Environmental, and Institutional Factors on Sustainability Report Assurance: Evidence from European Countries

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 regarding the main factors that can influence a company’s decision to assure its sustainability reports. Using a sample of 417 listed organizations based in different European countries over five years, the effects of stakeholder commitment, country orientation toward sustainability, firm environmental performance and business ethics controversies on the decision to assure SRs are assessed. The results show that a company’s decision to assure its sustainability reports is motivated by the need to maintain good relations with its 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) and to gain legitimacy. On the contrary, business ethics controversies do not seem to be relevant to a company’s assurance practices. This research provides new insights into the influence that social, environmental and institutional factors have on assurance strategies. New factors that previous research does not investigate—environmental performance, business ethics controversies and corporate governance—are tested. Factors that are already investigated in the literature are considered from an original perspective of introducing alternative measures (e.g. for the scope of national sustainability policies).