The Evolution and the Determinants of the Choice of Assurers for Sustainability Reports On

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This thesis investigates the developing area of sustainability assurance, to provide a better understanding of the current trends and driving factors of external assurance and the choice of assurance providers. This thesis is composed of three independent studies that aim to improve understanding of the current trends and driving factors in the assurance of sustainability reports. In the first study, I document different trends in the current assurance market using GRI data for 12,783 companies worldwide. The findings reveal that region, industry, company type and listed status are associated with different assurance practices. Furthermore, the growth in assured sustainability reports lags the growth in issuing sustainability reports. Therefore, the perceived value of assurance still seems to be questioned. Additionally, this study highlights the scarcely explored practice of switching assurers, showing that switching assurance providers is a common and pervasive practice. In the second and third study, I build on agency theory and the risk of information asymmetries to investigate the role of the board of directors and foreign institutional investors on companies assurance decision and choice of assurance provider. I document the association between the board of directors’ attributes and companies' choice of assurance provider. I provide evidence that corporate governance, industry and country-level considerations are all relevant, not just for the decision to assure the sustainability reports, but also for the choice of assurance provider. In countries with a stronger economic, legal and social environment, the probability of assuring the report is significantly higher, and companies have a higher tendency to choose a Big-4 firm as the assurer. In the third study, I argue that foreign institutional investors drive companies to engage in sustainability assurance. Furthermore, I argue that foreign institutional investors are more likely to be associated with companies’ decision to engage with Big-4 assurance providers, for two reasons: to ensure higher-quality assurance, and because Big-4 firms are internationally recognized. My findings suggest that foreign institutional investors play a significant role in enhancing the reliability of companies’ sustainability reports. The thesis findings inform regulators and other stakeholders and provide opportunities for further research.