Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Audit and CSR committees: are they complements or substitutes in CSR reporting, assurance and GRI framework adoption?

Audit and CSR committees: are they complements or substitutes in CSR reporting, assurance and GRI... This study aims mainly to test the effect of audit committee independence and expertise attributes on corporate social responsibility (CSR) reporting, assurance and global reporting initiative (GRI) framework adoption and to investigate how CSR committee existence moderates this main relationship.Design/methodology/approachThe study uses a large global sample that includes all (59,172) firm-year observations having CSR-related data in the Thomson Reuters Eikon database for a period between 2002 and 2019. The empirical analyses are based on random-effects logistic panel regression and Hayes methodology for the moderation analysis.FindingsThe study finds that audit committee independence and expertise are significantly associated with CSR reporting, CSR report assurance and GRI framework adoption. Moderation analysis largely supports the existence of a substitution role between audit and CSR committees and implies that audit committees are significant predictors of CSR reporting, assurance and GRI framework adoption mostly in the absence of the CSR committee.Practical implicationsThe findings propose audit committee members be extra-vigilant in CSR reporting and assurance practices arising from undertaking substitution roles with the CSR committee. Hence, firms may configure their corporate structure in line with the results such as augmenting the audit committee with independent and expert members if they do not constitute a CSR committee. If firms establish a CSR committee, audit committee members may allocate less time to CSR reporting and assurance and more time to financial reporting quality.Originality/valueThis is the first study, to the best of the authors’ knowledge, to investigate the direct and indirect effect of audit committees’ attributes not only on CSR disclosure but also on GRI implementation and CSR reporting external assurance, considering the CSR committee’s possible substitutability or complementarity moderating role. This research develops a deeper understanding of audit committees’ non-financial role. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting and Information Management Emerald Publishing

Audit and CSR committees: are they complements or substitutes in CSR reporting, assurance and GRI framework adoption?

Download PDF
36 pages

Loading next page...
 
/lp/emerald-publishing/audit-and-csr-committees-are-they-complements-or-substitutes-in-csr-VVkMwHM0Rb
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1834-7649
eISSN
1834-7649
DOI
10.1108/ijaim-04-2022-0086
Publisher site
See Article on Publisher Site

Abstract

This study aims mainly to test the effect of audit committee independence and expertise attributes on corporate social responsibility (CSR) reporting, assurance and global reporting initiative (GRI) framework adoption and to investigate how CSR committee existence moderates this main relationship.Design/methodology/approachThe study uses a large global sample that includes all (59,172) firm-year observations having CSR-related data in the Thomson Reuters Eikon database for a period between 2002 and 2019. The empirical analyses are based on random-effects logistic panel regression and Hayes methodology for the moderation analysis.FindingsThe study finds that audit committee independence and expertise are significantly associated with CSR reporting, CSR report assurance and GRI framework adoption. Moderation analysis largely supports the existence of a substitution role between audit and CSR committees and implies that audit committees are significant predictors of CSR reporting, assurance and GRI framework adoption mostly in the absence of the CSR committee.Practical implicationsThe findings propose audit committee members be extra-vigilant in CSR reporting and assurance practices arising from undertaking substitution roles with the CSR committee. Hence, firms may configure their corporate structure in line with the results such as augmenting the audit committee with independent and expert members if they do not constitute a CSR committee. If firms establish a CSR committee, audit committee members may allocate less time to CSR reporting and assurance and more time to financial reporting quality.Originality/valueThis is the first study, to the best of the authors’ knowledge, to investigate the direct and indirect effect of audit committees’ attributes not only on CSR disclosure but also on GRI implementation and CSR reporting external assurance, considering the CSR committee’s possible substitutability or complementarity moderating role. This research develops a deeper understanding of audit committees’ non-financial role.

Journal

International Journal of Accounting and Information Management – Emerald Publishing

Published: Jan 31, 2023

Keywords: Assurance; CSR reporting; Audit committee; GRI; CSR committee; Complementarity and substitution hypothesis; CSR reporting assurance

References

  • Corporate governance and accounting scandals
    Agrawal, A.; Chadha, S.
  • An organizational approach to comparative corporate governance: costs, contingencies, and complementarities
    Aguilera, R.V.; Filatotchev, I.; Gospel, H.; Jackson, G.
  • Determinants of social and economic reportings: evidence from Australia, the UK, and South African multinational enterprises
    Al Farooque, O.; Ahulu, H.
  • Shareholders' control rights, family ownership and the firm's leverage decisions
    Amin, Q.A.; Liu, J.
  • Instrumental variables and the search for identification: from supply and demand to natural experiments
    Angrist, J.D.; Krueger, A.B.
  • The impact of audit committee characteristics on CSR disclosure: an analysis of Australian firms
    Appuhami, R.; Tashakor, S.
  • Corporate social responsibility assurance and reporting quality: evidence from restatements
    Ballou, B.; Chen, P.C.; Grenier, J.H.; Heitger, D.L.
  • The effect of audit committee expertise, independence, and activity on aggressive earnings management
    Bédard, J.; Chtourou, S.M.; Courteau, L.
  • Strengthening the financial reporting system: can audit committees deliver?
    Bedard, J.; Gendron, Y.
  • Lagged explanatory variables and the estimation of causal effect
    Bellemare, M.F.; Masaki, T.; Pepinsky, T.B.
  • How can I deal with missing data in my study?
    Bennett, D.A.
  • Audit committee ownership and audit report lag: evidence from Australia
    Bhuiyan, M.B.U.; D’Costa, M.
  • Impact of CSR on cost of debt and cost of capital: Australian evidence
    Bhuiyan, M.B.U.; Nguyen, T.H.N.
  • Are fully independent audit committees really necessary?
    Bronson, S.N.; Carcello, J.V.; Hollingsworth, C.W.; Neal, T.L.
  • The role of corporate social responsibility (CSR) assurance in investors' judgments when managerial pay is explicitly tied to CSR performance
    Brown-Liburd, H.; Zamora, V.L.
  • The role of audit committee attributes in corporate sustainability reporting
    Buallay, A.; Al-Ajmi, J.
  • Understanding and contributing to the enigma of corporate social responsibility (CSR) assurance in the United States
    Casey, R.J.; Grenier, J.H.
  • The determinants of board size and independence: evidence from China
    Chen, C.H.; Al-Najjar, B.
  • Board size and the variability of corporate performance
    Cheng, S.
  • Revisiting the relation between environmental performance and environmental disclosure: an empirical analysis”, accounting
    Clarkson, P.M.; Li, Y.; Richardson, G.D.; Vasvari, F.P.
  • CSR and assurance services: a research agenda
    Cohen, J.R.; Simnett, R.
  • Does corporate social responsibility affect information asymmetry?
    Cui, J.; Jo, H.; Na, H.
  • The relative role of firm incentives, auditor specialization, and country factors as antecedents of non-financial audit quality
    Dalla Via, N.; Perego, P.
  • Meta-analyses of financial performance and equity: fusion or confusion?
    Dalton, D.R.; Daily, C.M.; Certo, S.T.; Roengpitya, R.
  • Does external assurance enhance the credibility of CSR reports? Evidence from CSR-related misconduct events in Taiwan
    Du, K.; Wu, S.J.
  • The whole is more than the sum of its parts - or is it? A review of the empirical literature on complementarities in organizations
    Ennen, E.; Richter, A.
  • Separation of ownership and control
    Fama, E.; Jensen, M.
  • Contractual versus non-contractual trade: the role of institutions in China
    Feenstra, R.C.; Hong, C.; Ma, H.; Spencer, B.J.
  • Determinants of voluntary CSR disclosure: empirical evidence from Germany
    Gamerschlag, R.; Möller, K.; Verbeeten, F.
  • Assurance of corporate social responsibility reports: examining the role of internal and external corporate governance mechanisms
    García‐Sánchez, I.M.; Hussain, N.; Khan, S.A.; Martínez‐Ferrero, J.
  • Board independence and GRI‐IFC performance standards: the mediating effect of the CSR committee
    García‐Sánchez, I.M.; Gómez; Miranda, M.E.; David, F.; Rodríguez Ariza, L.
  • Factors influencing board of directors’ decision-making process as determinants of CSR engagement
    Godos-Díez, J.-L.; Cabeza-García, L.; Alonso-Martínez, D.; Fernández-Gago, R.
  • Board leadership, outside directors’ expertise and voluntary corporate disclosures
    Gul, F.A.; Leung, S.
  • Corporate governance and corporate social responsibility disclosure
    Habbash, M.
  • Are corporate social responsibility disclosures relevant for lenders? Empirical evidence from France
    Hamrouni, A.; Uyar, A.; Boussaada, R.
  • Does audit committee substitute or complement other corporate governance mechanisms: evidence from an emerging economy
    Hassan, Y.; Hijazi, R.; Naser, K.
  • Specification tests in econometrics
    Hausman, J.A.
  • A study of the relationship between corporate governance structures and the extent of voluntary disclosure
    Ho, S.S.; Wong, K.S.
  • The behavior of maximum likelihood estimates under nonstandard conditions
    Huber, P.J.
  • Learning from directors' foreign board experiences
    Iliev, P.; Roth, L.
  • Corporate governance and corporate social responsibility disclosure: evidence from the US banking sector
    Jizi, M.I.; Salama, A.; Dixon, R.; Stratling, R.
  • Sustainability reporting in the aviation industry: worldwide evidence
    Karaman, A.S.; Kilic, M.; Uyar, A.
  • CSR achievement, reporting, and assurance in the energy sector: does economic development matter?
    Karaman, A.S.; Orazalin, N.; Uyar, A.; Shahbaz, M.
  • Corporate governance and corporate social responsibility disclosures: evidence from an emerging economy
    Khan, A.; Muttakin, M.B.; Siddiqui, J.
  • The determinants of corporate disclosure: a meta‐analysis
    Khlif, H.; Souissi, M.
  • The impact of ownership and board structure on corporate social responsibility (CSR) reporting in the Turkish banking industry
    Kiliç, M.; Kuzey, C.; Uyar, A.
  • Drivers and consequences of sustainability committee existence? Evidence from the hospitality and tourism industry
    Kılıç, M.; Uyar, A.; Kuzey, C.; Karaman, A.S.
  • Does institutional theory explain integrated reporting adoption of fortune 500 companies?
    Kılıç, M.; Uyar, A.; Kuzey, C.; Karaman, A.S.
  • Is earnings quality associated with corporate social responsibility?
    Kim, Y.; Park, M.S.; Wier, B.
  • Determinants of sustainability reporting and its impact on firm value: evidence from the emerging market of Turkey
    Kuzey, C.; Uyar, A.
  • On the use of instrumental variables in accounting research
    Larcker, D.F.; Rusticus, T.O.
  • The role of the audit committee in their oversight of whistle-blowing
    Lee, G.; Fargher, N.L.
  • PSMATCH2: Stata module to perform full mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing
    Leuven, E.; Sianesi, B.
  • The effect of audit committee characteristics on intellectual capital disclosure
    Li, J.; Mangena, M.; Pike, R.
  • Gender diversity, board independence, environmental committee and greenhouse gas disclosure
    Liao, L.; Luo, L.; Tang, Q.
  • Evaluating financial reporting quality: the effects of financial expertise vs. financial literacy
    McDaniel, L.; Martin, R.D.; Maines, L.A.
  • Corporate governance and corporate social disclosures: a meta-analytical review
    Majumder, M.T.H.; Akter, A.; Li, X.
  • Corporate compliance with non-mandatory statements of best practice: the case of the ASB statement on interim reports
    Mangena, M.; Tauringana, V.
  • Substitutes or complements? A configurational examination of corporate governance mechanisms
    Misangyi, V.F.; Acharya, A.G.
  • The impact of board and audit committee characteristics on corporate social responsibility: evidence from the Iranian stock exchange
    Mohammadi, S.; Saeidi, H.; Naghshbandi, N.
  • The direct and indirect effect of the existence of risk management on the relationship between audit committee and corporate social responsibility disclosure
    Musallam, S.
  • The effect of board capital and CEO power on corporate social responsibility disclosures
    Muttakin, M.B.; Khan, A.; Mihret, D.G.
  • On the relationships among several specification error tests presented by Durbin, Wu, and Hausman
    Nakamura, A.; Nakamura, M.
  • Stock market development and economic growth in Africa
    Ngare, E.; Nyamongo, E.M.; Misati, R.N.
  • Relationship-specificity, incomplete contracts, and the pattern of trade
    Nunn, N.
  • Complementary or substitutive effects? Corporate governance mechanisms and corporate social responsibility
    Oh, W.; Chang, Y.K.; Kim, T.
  • Differential audit quality, propensity score matching and Rosenbaum bounds for confounding variables
    Peel, M.; Makepeace, G.
  • Do audit committee attributes influence integrated reporting quality? An agency theory viewpoint
    Raimo, N.; Vitolla, F.; Marrone, A.; Rubino, M.
  • Boards of directors and substitution effects of alternative governance mechanisms
    Rediker, K.J.; Seth, A.
  • Corporate social responsibility and firm value: Guiding through economic policy uncertainty
    Rjiba, H.; Jahmane, A.; Abid, I.
  • Is environmental governance substantive or symbolic? An empirical investigation
    Rodrigue, M.; Mangan, M.; Cho, C.H.
  • An analysis of sustainability report assurance statements: evidence from Italian listed companies
    Rossi, A.; Tarquinio, L.
  • CEO overconfidence and CSR decoupling
    Sauerwald, S.; Su, W.
  • Walk the talk? How symbolic and substantive CSR actions affect firm performance depending on stakeholder proximity
    Schons, L.; Steinmeier, M.
  • Board attributes, CSR engagement, and corporate performance: what is the nexus in the energy sector?
    Shahbaz, M.; Karaman, A.S.; Kilic, M.; Uyar, A.
  • Board attributes, corporate social responsibility strategy, and corporate environmental and social performance
    Shaukat, A.; Qiu, Y.; Trojanowski, G.
  • The impact of corporate social responsibility on employee performance and cost
    Sun, L.; Yu, T.R.
  • Quo Vadis? Suggestions for future corporate governance research
    Tosi, H.L.
  • Corporate governance and corporate social responsibility disclosures in insurance companies
    Ullah, M.S.; Muttakin, M.B.; Khan, A.
  • Multivariate outlier detection in Stata
    Verardi, V.; Dehon, C.
  • Governance bundles, firm performance, and the substitutability and complementarity of governance mechanisms
    Ward, A.J.; Brown, J.A.; Rodriguez, D.
  • A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity
    White, H.
  • World governance indicators
  • The effects of the existence and financial expertise of audit committees on firms’ controversial activities evidence from IPOs
    Yu, J.; Yang, X.; Zhang, J.H.
  • Audit committee quality, auditor independence, and internal control weaknesses
    Zhang, Y.; Zhou, J.; Zhou, N.
  • Evaluating combined assurance as a new credibility enhancement technique
    Zhou, S.; Simnett, R.; Hoang, H.