The impact of assurance on the quality of voluntary environmental disclosures: An empirical analysis
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In response to investor and public concerns, companies are increasingly disclosing environmental information in a largely unregulated context. To engender greater credibility third parties are increasingly being hired to provide assurance of environmental reporting.
This study uses a stakeholder-agency theoretical perspective to examine whether the quality of voluntary environmental disclosures (GRI 2006) is improved when assured. Our sample comprised listed Australian companies disclosing environmental information in stand-alone reports, annual reports, and websites. Australia was chosen as the setting for this study as globally it has one of the highest rates of assured environmental reporting.
Results of this matched pairs study show that the quality of voluntary environmental disclosures is higher for assured companies than unassured companies. For assured companies, the quality is no different when assured by accountants or consultants. Additional analysis provides preliminary evidence that experience improves the quality of environmental disclosures.
This document has been peer reviewed.