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Sustainability Assurance Quality, Cost of Debt and Financial Constraints: Evidence From Australia

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  • Ann Ho
  • Shireenjit Johl
  • Ingrid Millar
  • Robyn Cameron

Abstract

This study examines the economic effects of sustainability assurance (SA) and its quality on the cost of debt (COD) and financial constraints (FC) among Australian firms before mandatory climate reporting and assurance effective 1 January 2025. Our regression analyses of Australian Securities Exchange listed firms (2015–2023) show that SA and higher SA quality measured using 12‐ and 15‐item indices significantly reduce COD and ease FC. These benefits are pronounced for firms obtaining SA from accounting firms, Big 4 assurers and common financial statement and sustainability assurers and for those operating in high carbon intensity industries and experiencing lower financial distress.

Suggested Citation

  • Ann Ho & Shireenjit Johl & Ingrid Millar & Robyn Cameron, 2026. "Sustainability Assurance Quality, Cost of Debt and Financial Constraints: Evidence From Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(1), pages 997-1023, March.
    • Handle: RePEc:bla:acctfi:v:66:y:2026:i:1:p:997-1023
    DOI: 10.1111/acfi.70149
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