CSR Assurance and Reporting Quality: Evidence From Restatements

51 Pages Posted: 10 Feb 2018 Last revised: 13 Aug 2020

See all articles by Brian Ballou

Brian Ballou

Miami University of Ohio - Department of Accountancy

Po-Chang Chen

Miami University of Ohio - Richard T. Farmer School of Business Administration

Jonathan H. Grenier

Miami University - Department of Accountancy

Dan L. Heitger

Miami University of Ohio

Date Written: January 31, 2018

Abstract

Previous research has shown that obtaining independent assurance of corporate social responsibility (CSR) reporting has capital market benefits and that these benefits are amplified when accountants provide the assurance. Yet, little is known about whether and the manner in which CSR assurance improves the quality of CSR reporting, and whether accounting providers improve reporting quality to a greater extent than non-accounting providers. This study uses the unique setting of CSR restatements to examine these issues. We present theoretical and empirical evidence supporting a competitive advantage of using accounting firms as assurance providers as they not only identify inaccuracies in previous reports earlier than non-accounting providers, but also prevent future reporting inaccuracies. CSR assurance, from either type of provider, also leads to improved reporting definitions, scopes, and methodologies that require restatements for comparability. Results also indicate that CSR reporting frameworks (e.g., GRI) are not a substitute for obtaining CSR assurance as the latter has incremental benefits over GRI usage in terms of identifying errors and reporting improvements. These results have implications for public policy makers considering the merits of mandating CSR assurance and for organizations assessing the relative benefits and costs of preparing GRI-based CSR reports, obtaining CSR assurance, and choosing between accounting vs. non-accounting CSR assurance providers.

Keywords: Corporate Social Responsibility, Restatements, Assurance, Reporting Frameworks

Suggested Citation

Ballou, Brian J. and Chen, Po-Chang and Grenier, Jonathan H. and Heitger, Dan L., CSR Assurance and Reporting Quality: Evidence From Restatements (January 31, 2018). Journal of Accounting and Public Policy, Available at SSRN: https://ssrn.com/abstract=3114256

Brian J. Ballou

Miami University of Ohio - Department of Accountancy ( email )

310 Laws Hall
Oxford, OH 45056-1675
United States

Po-Chang Chen

Miami University of Ohio - Richard T. Farmer School of Business Administration ( email )

3086 Farmer School of Business
Oxford, OH 45056
United States

Jonathan H. Grenier (Contact Author)

Miami University - Department of Accountancy ( email )

800 East High Street
Oxford, OH 45056
United States
513-529-2013 (Phone)

Dan L. Heitger

Miami University of Ohio ( email )

Oxford, OH 45056
United States

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