Empirical analysis of the effect of the joint provision of audit and sustainability assurance services on assurance quality Author links open overlay panel

Abstract

[EN] Recent papers have investigated how assurance increases the credibility of, and confidence in, sustainability disclosure. However, there is debate about the quality of this process. As part of this debate, the authors examine, firstly, whether the provision of audit and sustainability assurance services by the same practitioner affects the quality of the assurance, focusing on a trade-off between the knowledge spillover effect and the economic dependence effect. Secondly, the authors also examine whether the industry specialization of the assurance provider could moderate the above relationship, reinforcing the knowledge spillover or reducing the economic dependence effects. Using international data from the period 2007e2016, evidence supports that the provision of audit and sustainability assurance services by an incumbent auditor produces knowledge spillover, leading to higher assurance quality. Results also find that industry specialization increases the provider’s knowledge of matters on which sustainability assurance is given and enhances the impact of joint provision on assurance quality. The analysis is further extended to explore this evidence in contexts characterized by higher agency costs, by a country’s greater stakeholder-orientation, a country’s greater rate of demand for assurance, and countries where assurance is non-mandatory.