Center for Advancing Accounting

Sustainability Reporting in Global Listings Context: A Legitimacy Theory Evaluation of Relevant Empirical Evidence

• In Event: Impact of the Board, External Assurance and the Global Reporting Intitiatives on Sustainability Reporting

Abstract

This study examines the quality of sustainability reporting, in relevance to particular corporate practices. As suggested by legitimacy theory, these features are the external assurance of the sustainability report, independence of the board, and board’s chair. Using global reporting initiative (GRI) assessment criteria for sustainability reports, we find that firms that externally assure their sustainability reports are providing highly qualified reports. Further, we find that firms with an independent chair within their boards are ascribing high ranks within the GRI criteria for quality sustainability reporting. However, contrary to the likely expectations of legitimacy theory, the results reveal that the percent of independent board members is not a significant driver for quality reports. Overall, this study enhances our understanding of firms’ behavior toward certain corporate practices, to maintain/extend their societal legitimacy, through quality sustainability reports. Therefore, stakeholders should consider such governance practices as drivers for qualified sustainability reporting.

Authors

• Noha Abdelrahman, The British University in Egypt

• Barbara Marie Porco, Fordham University

• Kenneth D’Silva, London South Bank University

• Mohamed Rashwan, The British University in Egypt