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External corporate governance and assurance of corporate social responsibility reports: evidence from China

External corporate governance and assurance of corporate social responsibility reports: evidence... This paper aims to verify whether the legitimate pressure of external forces on heavily polluting firms’ corporate social responsibility (CSR)-related behaviors affect firms’ assurance strategy in the Chinese context. The authors argue that, under external pressure, as a source of legitimacy, the assurance over CSR reports allows the business behaviors of heavy polluters to be recognized by society.Design/methodology/approachThis paper sampled listed heavy polluters in China from 2011 to 2018 and used the multiperiod logit model to examine the effects of external corporate governance on firms’ assurance decisions. Principal component analysis methods were used to construct a comprehensive framework of external corporate governance. The indicators were obtained from the China Stock Market and Accounting Research databases, the NERI Report and the China Urban Statistical Yearbook.FindingsThis paper confirms that external corporate governance positively affects firms’ assurance decisions, and good financial conditions, well-governed internal controls and sufficient government subsidies positively moderate this effect.Practical implicationsThe findings provide feasible ways to encourage firms’ high-quality corporate environmental information disclosure, thus providing valuable guidance for policymakers and other stakeholders to effectively supervise firms’ CSR behaviors.Social implicationsThe findings are of great importance in encouraging high-quality corporate environmental information disclosures, improving the support of capital markets among developing countries and drawing social attention to the environmental protection and social responsibility of heavy polluters.Originality/valueThe research extends the current research in the field of social environmental accounting by using legitimacy theory to explain firms’ assurance motivations. Additionally, this paper focuses on the practices of assurance services in the emerging economy and provides suggestions for developing assurance over CSR reports. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Sustainability Accounting Management and Policy Journal Emerald Publishing

External corporate governance and assurance of corporate social responsibility reports: evidence from China

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References (178)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2040-8021
eISSN
2040-8021
DOI
10.1108/sampj-05-2022-0260
Publisher site
See Article on Publisher Site

Abstract

This paper aims to verify whether the legitimate pressure of external forces on heavily polluting firms’ corporate social responsibility (CSR)-related behaviors affect firms’ assurance strategy in the Chinese context. The authors argue that, under external pressure, as a source of legitimacy, the assurance over CSR reports allows the business behaviors of heavy polluters to be recognized by society.Design/methodology/approachThis paper sampled listed heavy polluters in China from 2011 to 2018 and used the multiperiod logit model to examine the effects of external corporate governance on firms’ assurance decisions. Principal component analysis methods were used to construct a comprehensive framework of external corporate governance. The indicators were obtained from the China Stock Market and Accounting Research databases, the NERI Report and the China Urban Statistical Yearbook.FindingsThis paper confirms that external corporate governance positively affects firms’ assurance decisions, and good financial conditions, well-governed internal controls and sufficient government subsidies positively moderate this effect.Practical implicationsThe findings provide feasible ways to encourage firms’ high-quality corporate environmental information disclosure, thus providing valuable guidance for policymakers and other stakeholders to effectively supervise firms’ CSR behaviors.Social implicationsThe findings are of great importance in encouraging high-quality corporate environmental information disclosures, improving the support of capital markets among developing countries and drawing social attention to the environmental protection and social responsibility of heavy polluters.Originality/valueThe research extends the current research in the field of social environmental accounting by using legitimacy theory to explain firms’ assurance motivations. Additionally, this paper focuses on the practices of assurance services in the emerging economy and provides suggestions for developing assurance over CSR reports.

Journal

Sustainability Accounting Management and Policy JournalEmerald Publishing

Published: Apr 5, 2023

Keywords: External corporate governance; Assurance; Heavily polluting firms; Principal component analysis

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