Impact of disclosure and assurance quality of corporate sustainability reports on access to finance

Abstract

This paper investigates the impact of corporate social responsibility (CSR) disclosure quantity, quality, and external validation concerning assurance on capital constraints.We examine if these disclosure characteristics matter to the investors in the financial market, then they should be positively evaluated by financial market participants.More specifically, we study the effects of disclosure quantity, quality, and assurance on the access to financial resources for reporting firms. Analysis of data of an international sample for the period of 2007-2016 significantly supports the value relevance idea of CSR disclosure quality. We document that availability of more information about the firm's CSR initiatives eases the financial access. Furthermore, the quality and external assurance of CSR disclosure further strengthen the relationship between disclosure and access to finance. Our paper not only provides support for buying assurance but also argue for better assurance quality.

Integrated reporting of environmental, social, and governance and financial data: Does the market value integrated reports?

“…Pflugrath et al () and Hodge et al () state that assured sustainability reports are perceived with a higher reliability than without assurance. Several studies establishing econometric models based on multivariate analysis support these findings (Cuadrado‐Ballesteros, Martínez‐Ferrero, & García‐Sánchez, ; Martínez‐Ferrero & García‐Sánchez, ; García‐Sánchez, Hussain, Martínez‐Ferrero, & Ruiz‐Barbadillo, ).…”

“…Furthermore, O'Dwyer () examines the difficulties in creating a new assurance practice and sees a competition between the types of assurance providers: those with accounting and “non‐accounting” backgrounds. Several studies analyze the impact of the assurance providers on the credibility of ESG reports and state assurance provided by a professional accountant as more credible (Cuadrado‐Ballesteros et al, ; García‐Sánchez, Hussain, et al, ; Martínez‐Ferrero & García‐Sánchez, ; Simnett, Vanstraelen, & Chua, ).…”

What colour is the corporate social responsibility report? Structural visual rhetoric, impression management strategies, and stakeholder engagement

“…In summary, as a consequence of the important role that institutional pressures have in information disclosure policies (i.e., García‐Sánchez, et al, , ), we believe that the structural dimensions of impression management techniques differ between sectors of activity due to the mimetic isomorphism effect (Amor‐Esteban et al, , ) and between periods of time due to legal changes in Spain that have regulated these informative practices as mandatory, favouring the normalisation of information (coercive effect).…”

“…In this sense, companies would benefit from the advantages traditionally associated with increasing organisational transparency and its impact on the reduction of asymmetric information problems and valuation of future risks (Martínez‐Ferrero, Ruiz‐Cano, & García‐Sánchez, ). Benefits include those of an economic nature associated with access to better sources of financing and with better conditions (i.e., Dhaliwal, Li, Tsang, & Yang, ; García‐Sánchez, Hussain, Martínez‐Ferrero, & Ruiz‐Barbadillo, ), as well as others of an intangible nature linked to image and business reputation (Cormier, Magnan, & Van Velthoven, ; Amran, Periasamy, & Zulkafli, ).…”

Does Structural Capital Affect SDGs Risk-Related Disclosure Quality? An Empirical Investigation of Italian Large Listed Companies

“…In fact, in the investors' perspectives, CSR activities have been investigated in their relationship with financial performance [10] and access to finance [11]. CSR reports have also been put in relationships with stakeholder engagement and forecast accuracy by financial analysts: García-Sánchez et al [12] found evidence about how the joint use of global reporting initiative (GRI) guidelines, and the International Finance Corporation (IFC) performance standards (defined as GRI-IFC disclosure strategy) has a positive impact on the accuracy of analysts' forecasts.…”