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    Assuring a New Market: The Interplay between Country-Level...
    research summary posted August 31, 2016 by Jennifer M Mueller-Phillips, last edited March 2, 2017, tagged 13.0 Governance 
    Assuring a New Market: The Interplay between Country-Level and Company-Level Factors on the Demand for Greenhouse Gas (GHG) Information Assurance and the Choice of Assurance Provider
    Practical Implications:

     The results from this study highlight the complexity of assurance-related decisions and the interplay between macro-level and micro-level institutional factors. The results also reveal the diversified nature of this particular emerging assurance market, which should prove to be a rich source of future research.


     Zhou, S., R. Simnett, and W. J. Green. 2016. Assuring a New Market: the Interplay between Country-Level and Company-Level Factors on the Demand for Greenhouse Gas (GHG) Information Assurance and the Choice of Assurance Provider. Auditing: A Journal of Practice and Theory. 35 (3): 141-168.

    greenhouse gas assurance, stakeholder theory, legal environment, corporate governance.
    Purpose of the Study:

    Recently there has been a dramatic increase in the public reporting and assurance of broad ranging sustainability information covering multiple nonfinancial elements. In addition to this, there has been greater public reporting of organizations’ single element greenhouse gas (GHG) emissions. The growth of GHG reporting ultimately resulted from the heightened awareness of global warming among investors, stakeholders, and regulators, as well as the growing number of countries mandating the reporting of GHG emissions. As more and more companies publish this information, it follows that there is a growing reliance on independent assurance of these nonfinancial reports; consequently, two major types of publicly available assurance engagements have evolved: assurance on the broad-ranging subject matter of sustainability reporting and assurance of an organization’s report of their GHG emissions. Many studies have examined the assurance of the broader sustainability subject matter; however, there is limited research examining the more defined and specific GHG emissions assurance engagements, as this paper does.

    Design/Method/ Approach:

    The authors analyzed information about GHG emissions assurance from a sample of 32 countries that comprise corporate responses to the Carbon Disclosure Project’s annual questionnaires. These data were gathered within the period of 2008-2011

    • The authors find that just over 40 percent of disclosing companies purchase third-party assurance services, and that just over half of these purchase these services from accounting firm providers; however, this purchasing behavior differs significantly between countries.
    • The authors find that assurance is more likely to be purchased by companies in stakeholder-oriented countries and less likely to be purchased as the strength of the legal enforcement system increases. However, further analysis reveals that these relationships are moderated by the strength of company-level corporate governance mechanisms.
    • The authors find that the business culture (stakeholder versus shareholder orientation) of a country significantly affects the choice of accounting firms as assurance providers.
    • The authors find a low adoption rate for U.S. assurance of GHG reports, which is consistent with previous findings regarding the U.S. adoption rate of sustainability reports.