What factors affect credibility perceptions of sustainability reporting?

Abstract

Reporting credibility is essential for useful sustainability reporting but there is a general consensus that sustainability disclosures lack credibility. This thesis investigates factors that affect stakeholders’ perceptions of the credibility of sustainability reporting by surveying users, preparers, assurance providers and standard-setters of sustainability reporting.

Researchers have examined some factors that affect the credibility of sustainability reporting in a piecemeal fashion. This thesis develops an integrated analytical framework of credibility of sustainability reporting, based on the concept of credibility of information in communication, psychology, and accounting literature. The analytical framework was then refined based on 33 semi-structured interviews with stakeholders of sustainability reporting. The revised framework includes five credibility factors pertaining to the source of sustainability reporting and 21 credibility factors pertaining to the information characteristics of sustainability disclosures. The refined analytical framework is examined empirically by surveying 105 stakeholders (users, preparers, assurance providers and standard-setters of sustainability reporting) using a questionnaire.

The questionnaire responses indicate that source credibility, assurance quality, materiality and completeness of sustainability disclosure are particularly important to the credibility assessment of sustainability reporting. The results also reveal differences in credibility assessment across different types of stakeholders. Differences are particularly prevalent in the perceptions of users versus preparers. Users consider the attributes of management, assurance-related factors and information characteristics to be more important than preparers, revealing a gap in users’ and preparers’ credibility perceptions of sustainability reporting.

The findings help inform practitioners on the misalignment of their perceptions and users’ perceptions regarding the credibility of sustainability reporting. The findings also highlight to standard-setters the need for refinement of the current sustainability reporting guidelines to bridge the credibility gap in sustainability reporting. Show more