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Does Sustainability Assurance Improve Managerial Investment Decisions?

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  • Maria Steinmeier
  • Michael Stich

Abstract

This study analyzes the effect of sustainability assurance (SA) on managerial investment decisions in terms of sustainability investment (SI) efficiency. We hypothesize that SA improves the set of information available for managerial decision making, resulting in higher SI efficiency. Further, we argue that SA reduces information asymmetry between managers and investors, which enables investors to more effectively monitor a firm’s management, thus again leading to higher SI efficiency. Empirical findings for an international sample support these links. Moreover, we find weak evidence that SA provided by an auditor is associated with a stronger effect on SI efficiency. In additional analyses, we find weak evidence that the association of SA and SI efficiency is more pronounced if the SA is provided on a higher scope, on a higher level, and if other governance mechanisms are weak.

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  • Maria Steinmeier & Michael Stich, 2019. "Does Sustainability Assurance Improve Managerial Investment Decisions?," European Accounting Review, Taylor & Francis Journals, vol. 28(1), pages 177-209, January.
    • Handle: RePEc:taf:euract:v:28:y:2019:i:1:p:177-209
    DOI: 10.1080/09638180.2017.1412337
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    Cited by:

    1. Ha Thanh Nguyen & Balachandran Muniandy, 2021. "Gender, ethnicity and stock liquidity: evidence from South Africa," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 2337-2377, April.
    2. Pei‐Chi Kelly Hsiao & Charl de Villiers & Claire Horner & Hein Oosthuizen, 2022. "A review and synthesis of contemporary sustainability accounting research and the development of a research agenda," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4453-4483, December.
    3. Shan Zhou, 2022. "Reporting and Assurance of Climate‐Related and Other Sustainability Information: A Review of Research and Practice," Australian Accounting Review, CPA Australia, vol. 32(3), pages 315-333, September.
    4. Kerstin Lopatta & Thomas Kaspereit & Sebastian A. Tideman & Anna R. Rudolf, 2022. "The moderating role of CEO sustainability reporting style in the relationship between sustainability performance, sustainability reporting, and cost of equity," Journal of Business Economics, Springer, vol. 92(3), pages 429-465, April.
    5. Le Luo & Qingliang Tang & Hanlu Fan & Jamie Ayers, 2023. "Corporate carbon assurance and the quality of carbon disclosure," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(1), pages 657-690, March.
    6. Lorenzo Dal Maso & Gerald J. Lobo & Francesco Mazzi & Luc Paugam, 2020. "Implications of the Joint Provision of CSR Assurance and Financial Audit for Auditors' Assessment of Going‐Concern Risk†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 1248-1289, June.

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