Board attributes and companies’ choice of sustainability assurance providers

We study whether and how the monitoring quality of the board of directors is associated with the choice of providers of assurance for sustainability disclosures. We also examine whether this relation depends on companies’ economic, legal, and social environment. In an international empirical study considering five categories of assurance providers, we find that key board attributes, including board size, frequency of board meetings, CEO separation, proportion of women on the board, and the existence of a sustainability committee affect the type of assurance provider chosen by companies. Overall, companies with higher board monitoring quality are more likely to appoint a Big 4 assurer for their sustainability disclosures. Companies with a sustainability committee are more likely to engage an engineering firm, while firms with more board meetings are more likely to appoint an expert assurer. Moreover, we find that companies based in countries with strong environments are more likely to engage an external assurance provider, particularly a Big 4 assurer or an engineering firm. Overall, our results indicate that international sustainability disclosure assurance choices depend on corporate governance practices, as well as countries’ economic, social and legal environment.


Introduction
We study whether the attributes of the board of directors, which reflect its monitoring quality, affect companies' choice of sustainability assurance provider.We also evaluate whether this relation depends on the economic, legal, and social environment in which companies operate.Our focus on the environment is particularly important to explain organisational search for legitimacy as a process that results from the interaction of multiple actors at a macro level (Suddaby et al. 2017, Deegan 2019).
In the last decade, companies' production of standalone sustainability reports has increased significantly worldwide (Stolowy and Paugam 2018). 1 Such developments have been followed by considerable growth in the voluntary assurance of sustainability reports by external assurers (Christensen et al. 2021).However, research on the assurance of sustainability reporting is still in its early stages (Hummel et al. 2019).As noted by Maroun (2020) and Cohen and Simnett (2015), the choice of assurance provider is now a relevant area of study, and there are still many opportunities to further investigate the types of assurance providers.Understanding the factors leading to the choice of specific assurance providers and how they change in different settings is important because such a decision may build legitimacy for a firm's sustainability initiatives (Reimsbach et al. 2018, Farooq and De Villiers 2019, Michelon et al. 2019), among other effects.
We use a large international sample to assess the determinants of the choice of assurance provider and consider five different types of assurance providers in our analyses.Specifically, we examine data from an international sample of 2271 firms for the period 2010-2020 and classify assurance providers into five types: (i) Big-4 firms, (ii) accounting firms, (iii) engineering firms, (iv) consulting firms and (v) individual experts.We argue that when the board of directors displays higher monitoring quality, it ensures sustainability reporting reliability by choosing an appropriate assurance provider.We predict that companies with high monitoring quality of their boards of directors and operating in countries with strong economic, legal, and social environments have a higher probability of (i) engaging in sustainability assurance and (ii) choosing Big-4 firms as the assurance providers of their sustainability reports.
An initial analysis reveals that most of the attributes of the board of directors that we consider as proxies for monitoring quality are positively associated with the decision to assure the firm's sustainability reports.Our main results provide evidence that these attributes also determine the choice of assurance provider: the probability of choosing a Big-4 firm is higher in firms with (i) larger board size, (ii) CEO-chairperson separation, (iii) a higher percentage of women on the board and (iv) a higher percentage of independent board members.Additionally, firms have a higher probability of choosing an expert when board meetings are more frequent and choosing an engineering firm when a sustainability committee exists.Using a score based on the initial six attributes provides further evidence that the monitoring quality of the board of directors has a direct impact on the decision to assure sustainability reports, as well as on the choice of assurer.
We next assess the interaction effect of the board of directors' monitoring quality and countries' economic, legal, and social environments on sustainability assurance. 2Our results indicate that companies with higher monitoring quality of their boards of directors, which operate in stronger economic, legal, and social environments, are more likely to (i) assure their sustainability reports and (ii) choose Big-4 firms as their assurers.
This study makes three important contributions.First, we provide evidence that the link between sustainability disclosures and the decisions that may legitimise them (assurance and the choice of assurer) are context-specific, addressing an aspect that tends to be ignored by researchers and is one of the shortcomings of institutional theory (Deegan 2019).This approach also extends the prior literature by focusing on the choice of assurance provider rather than on the 1 In the last decade, several events around the world have changed companies' sustainability reporting practices, reinforcing the need to investigate the reliability of such reports (e.g.Christensen et al. 2021). 2 By assessing the impact of the environment on the relation between the monitoring quality of the board of directors and assurance decisions, we extend the findings of Simnett et al. (2009), who found that companies operating in weak legal environmental countries, or in environmentally risky industries do not necessarily appoint a member of the auditing profession to assure their sustainability reports.However, these authors suggested that the choice of assurance provider is less important than the assurance decision itself, as they found no significant results for this analysis.
determinants of the voluntary assurance of sustainability reports (Kolk andPerego 2009, Martínez-Ferrero andGarcía-Sánchez 2017a).Second, we contribute to the corporate governance literature by providing international evidence that the attributes of the monitoring quality of the boards of directors are associated with companies' sustainability assurance decisions.In this vein, our research responds to calls for a better understanding of the international infrastructure of corporate social responsibility (Pisani et al. 2017), as prior attempts to examine the effects of board characteristics on sustainability assurance have not reflected the current institutional pressures faced by firms (García-Sánchez et al. 2019).Third, we contribute to the sustainability assurance literature by showing that a dichotomous approach to the classification of assurance providers is not enough to capture the nuances associated with companies' choice of assurance provider.

Literature review and hypothesis development 2.1. Legitimacy theory and assurance
Legitimacy can be seen as a property of an entity, a process, or a perception.Suddaby et al. (2017) argue that in studies that consider legitimacy a property, the focus is narrow, and only the organisation and its external environment are considered, while when researchers consider legitimacy as a process, a broader lens assesses a more macro-level analysis.Thus, once a firm is seen as legitimate, it is still possible that society's expectations (in a broad sense) evolve and that the firm must adjust itself to be perceived by its stakeholders as legitimate.Corporate disclosure may aid companies in their quest for legitimacy.In this sense, Deegan (2019) calls our attention to the fact that the effectiveness with which corporate disclosures work to legitimise an organisation might be context specific, which is an aspect that many researchers have tended to ignore, as previously mentioned by Tilt (2018).
When legitimacy is seen as a process, the key actors involved in constructing legitimacy are 'those whose primary interest is in changing the process by which legitimacy is constructed' (Suddaby et al. 2017).In our study, we consider the board of directors the legitimacy actor.Additionally, to address the shortcoming of legitimacy theory, which Deegan (2019) considered particularly relevant, we assess how the link between the monitoring quality of the board of directors and firms' decisions regarding assurance is moderated by the setting in which the firm operates.
Consistent with the idea that the reliability of sustainability reporting can be improved by assurance, there has been growing reliance on independent assurance (Simnett et al. 2009, Edgley et al. 2010, Jones and Solomon 2010).Assurance is defined by the Global Reporting Initiative (GRI) as those 'activities designed to result in published conclusions on the quality of the report and the information contained within it' (GRI 2006).Empirical evidence shows that assurance statements in sustainability disclosures increase users' confidence and perceptions of information reliability (Hodge et al. 2009, Pflugrath et al. 2011, Fuhrmann et al. 2017).Accordingly, Reimsbach et al. (2018) find that the assurance of sustainability information increases firms' perceived sustainability performance and leads to more investment-related judgement.Thus, sustainability reporting affects the social judgements made on firms, which can be a matter of 'life and death' for an organisation (Bitektine 2011).
While the importance of assurance is generally accepted, the lack of a clear definition of who should assure sustainability reports and the required characteristics results in different types of assurance providers.Furthermore, several decisions in terms of assurance engagements (e.g.materiality) depend on assurance providers' judgement (Canning et al. 2019) and therefore result in differences in the assurance engagement process between different types of assurance providers (Channuntapipat et al. 2019).The choice of assurance provider is an important decision for a company, as prior studies suggest that it affects stakeholders' perceptions and investors' decisions (Pflugrath et al. 2011, Ferguson and Pündrich 2015, Clarkson et al. 2019).These different perceptions may affect a firm's legitimacy in the eyes of its stakeholders.
Different classifications of assurers have been used in previous research.While some studies have used an accounting versus non-accounting classification (e.g.Casey andGrenier 2015, Hummel et al. 2019), others have considered Big-4 versus non-Big-4 providers (e.g.Fernandez-Feijoo et al. 2015, Clarkson et al. 2019).In this study, we classify sustainability assurance providers into five types (Big-4 firms, accounting firms, engineering firms, consulting firms, and expert opinions).Prior auditing studies have suggested that Big-4 firms are high-quality auditors due to their size and strong reputation (Audousset-Coulier 2015, Al-Shaer and Zaman 2019).Thus, we distinguish between Big-4 firms and other accounting firms.The non-accounting group of sustainability assurance providers represents a more diverse group and includes engineering firms, consulting firms and experts (Farooq and De Villiers 2019). 3hereas accounting firms are known for their expertise in reporting and assurance and focus on the credibility and robustness of their assurance methodologies and standards, their understanding of sustainability has been questioned (De Beelde and Tuybens 2015).In this regard, research has indicated that non-accounting firms have better subject matter knowledge (Channuntapipat et al. 2020).Engineering firms are well known for their technical expertise, knowledge of sustainability and understanding of complex processes (e.g.DNV GL).Similar to Big-4 firms, large engineering firms have the potential to enjoy size advantages such as economies of scale (Farooq and De Villiers 2019).Consulting firms are generally smaller than accounting or engineering firms and tend to operate locally, have greater sustainability reporting expertise and have much more profound knowledge of firms' local stakeholders (GRI 2013).An expert opinion is provided by an individual who has subject matter expertise.For example, for many years, the sustainability reports of JTEKT (a Japanese multibillion corporation) were assured by Tamio Yamaguchi, who also assured other companies such as Topcon (a Japanese optical manufactory company) (Yamahuch 2017).
While the literature has identified different factors affecting companies' decisions to voluntarily assure their sustainability reports (Darnall et al. 2009, Simnett et al. 2009, Kolk and Perego 2009, Herda et al. 2014, Martínez-Ferrero and García-Sánchez 2017b, Liao et al. 2018), little is known about companies' decisions to choose among different types of assurance providers.Simnett et al. (2009) found that companies operating in countries with weak legal environments (e.g.Mexico, China, and Turkey) or in environmentally risky industries (e.g.mining, manufacturing, and utilities) do not necessarily appoint a member of the auditing profession to assure their sustainability reports.Additionally, the above authors suggested that the choice of assurance provider is less important than the assurance decision itself.Other studies led to conclusions that are inconsistent with the above findings.For example, Hodge et al. (2009) found weak evidence that non-professional investors find an assurance opinion provided by a professional accounting firm more reliable than one provided by a consulting firm.Moreover, Pflugrath et al. (2011) found that financial analysts from the US perceive accounting firms as more credible assurers, whereas analysts from Australia and the UK show little difference in their perceptions of enhanced credibility between different assurer types.Prior studies have also found that industry sensitivity does not affect companies' decisions to choose either an accounting or non-accounting assurance provider (Peters andRomi 2015, Liao et al. 2018).

Board of directors' monitoring quality
An efficient board of directors should ensure transparency, accountability, and fairness to stakeholders (Aras and Crowther 2008) as they monitor managers' actions.Boards of directors have a say in companies' decisions, including setting a sustainability agenda and allocating resources to ensure companies' sustainability performance (Jo andHarjoto 2011, Jizi 2017).As managers may use sustainability reports as a greenwashing mechanism, delivering an unrealistic, more sustainable image of their firms (Lyon andMaxwell 2011, Walker andWan 2012), a board of directors presenting high monitoring quality can promote the assurance of the firm's reports as a reliability-enhancing mechanism (Wang et al. 2020), which likely leads to an increase in firms' legitimacy.
Prior studies on corporate governance and auditor choice have determined that effective corporate governance is associated with companies' choice of a high-quality external auditor (Chen andZhou 2007, Carcello et al. 2011).However, only a few studies examine the effect of governance mechanisms and attributes on companies' decisions to assure sustainability reports and the type of assurance provider.For instance, Peters and Romi (2015) measure sustainability-oriented corporate governance in the US using factors such as the presence of the chief sustainability officer (CSO) on the board and the existence of a sustainability committee, finding evidence that these sustainability-oriented measures affect companies' assurance decisions.Al-Shaer and Zaman (2018) provide evidence that an audit committee is positively associated with sustainability assurance decisions and that both audit committee independence and board size are associated with the choice of a Big-4 assurer.Liao et al. (2018) investigate the effect of boards' attributes on companies' assurance decisions in the Chinese context, finding evidence that companies with large board sizes, more female directors, and a separation of the CEO and chairperson positions are more likely to assure their sustainability reports.Additionally, the above authors find that boards with more female directors are more likely to rely on assurance from auditing firms than those with more male directors.
Although the notion of quality in sustainability assurance is debatable, as the engagement of assurance providers may vary considerably depending on their aim to serve and their conception of sustainability (Channuntapipat et al. 2019), prior studies have assumed that Big-4 firms are perceived as high-quality sustainability assurance providers (Perego 2009, Clarkson et al. 2019), just as they are assumed to be high-quality audit providers.Assurance studies have suggested that Big-4 firms are more likely to protect their reputations (Humphrey et al. 2009, Perego 2009, Clarkson et al. 2019) by providing higher-quality assurance.Previous research has shown that the international presence and reputation of Big-4 firms are important determinants of their choice as assurance providers (Audousset-Coulier 2015).
From a legitimacy point of view, two types of legitimacy may be pursued by the board of directors when choosing Big-4 assurance providers: (i) procedural legitimacy, which is based on favourable evaluations of the soundness of the organisation's procedures and processes (Suchman 1995), and (ii) linkage legitimacy, which is based on the organisation's linkages with highly legitimate social actors in its environment (Baum and Oliver 1991).We argue that boards of directors with higher monitoring quality may choose Big-4 firms as their sustainability assurance providers while seeking legitimacy.Our reasoning assumes that boards of directors with higher monitoring quality are commonly more conservative in their decisions (García Lara et al. 2007) and therefore consider Big-4 assurers a more legitimate choice of sustainability assurance providers.Such a choice puts the board of directors in a position of being 'better safe than sorry', protecting their firms and their own reputation capital (Fredriksson et al. 2020).Therefore, we state our first hypothesis as follows: H1: Companies with high quality board monitoring are more likely to choose Big-4 firms for assurance of their sustainability disclosures.

Environment
As previously mentioned, legitimacy theory should evolve to consider the context in which firms operate to allow a better understanding of how disclosure is associated with firm legitimacy.When we consider legitimacy as a process, we must use a wide lens to assess the factors impacting such legitimacy.Thus, we consider the environment in which firms operate, as society's expectations about companies' social performance are shaped by institutional, legal, and cultural factors (Aguilera et al. 2007, Gjølberg 2009).
Different studies have indicated that country orientation affects companies' sustainability practices.Williams and Aguilera (2008) suggested that country orientation can influence the importance of sustainability issues in business operations at the country level.Simnett et al.'s (2009) results showed that companies operating in stakeholder-oriented countries are more likely to assure their sustainability reports and choose auditing firms.Additionally, Simnett et al. (2009) found that companies operating in a country with a strong legal environment are more likely to assure their sustainability reports.Moreover, Kolk and Perego (2009) found that companies operating in stakeholder-oriented countries are more likely to assure their reports.However, these studies do not examine the effects of dependencies between the institutional environment and firms' internal attributes on their sustainability practices.
Some corporate governance studies have taken into account the interaction effects with the environment in which the firm operates, albeit in different contexts.For example, Bell et al. (2012) studied foreign initial public offerings (IPOs) and considered how host country institutions moderate the relation between home country legal institutions and the success of foreign IPOs, as well as the relation between board independence and the success of foreign IPOs.Their results indicated that the impact of the dependent variables of interest is 'contingent upon the referent institutional context'.Bell et al. (2014) further extended this line of enquiry by examining market responses to foreign IPOs in the US, identifying the strength of minority shareholder protection in a foreign IPO's home country as a condition affecting the number of governance mechanisms required to achieve a high-value perception by US investors.A related approach is to consider the variation in country-level factors.For example, Krause et al. (2016) examined how the association between cultural power distance and CEO power is mediated by the variance in the former across a firm's geographic markets.
We expand on legitimacy theory and this line of corporate governance studies by examining how the interaction effect between the environment in which a company operates and the board of directors' monitoring quality affects assurance decisions.We build our expectations on the assumption that a strong economic, legal, and social environment protects firms' investors and other stakeholders by increasing firm transparency and accountability (Ke et al. 2015).To assess the environment, we consider the study by Isidro et al. (2020).They examined the association between 72 individual country-level attributes and financial reporting quality, providing evidence of the positive and significant association between different country-level factors and high-quality financial reporting.Unlike prior international studies using a single country environment measure, the factors introduced in the present study provide 'one method to deal with the observed co-dependencies of countries' economic, political, regulatory, and social characteristics' (Isidro et al. 2020, p. 295).We adopt the factor that 'consists of a mix of economic, legal, and social variables' and predict that companies with boards of directors presenting higher monitoring quality, and operating in countries with strong economic, legal, and social environments, are more likely to engage in sustainability assurance.
Whereas board of directors with higher monitoring quality are more likely to pursue higher levels of legitimacy through assurance, companies operating in countries with a strong economic, legal, and social environment are also under more pressure to show they are transparent and accountable.Consequently, we hypothesise the following: H2a: Companies with high quality board monitoring, and operating in countries with strong economic, legal, and social environments, are more likely to engage in sustainability assurance.
As previously noted, Big-4 firms are commonly associated with higher assurance quality.However, there is evidence that the quality of the audits of Big-4 firms can differ significantly across countries.For example, Ke et al. (2015) argued that China's weak institutional environment 'results in Big-4 firms providing lower-quality audits to companies that are listed only in China'.Moreover, when comparing the audits performed by Big-4 firms in the US to those performed in less litigious (but economically similar) environments in other Anglo-American countries, Khurana and Raman (2004, p. 473) found that it is 'litigation exposure rather than brand name reputation protection that drives perceived audit quality'.Thus, it is possible that the quality or perceived quality of the assurance provided by Big-4 firms also varies across countries.In this scenario, the environment in which both the firm and the assurer are operating becomes crucial.Indeed, it is possible that different environmental factors have different effects, both in terms of direction and intensity.We posit that when firms operate in strong economic, legal, and social environments, a board of directors with high monitoring quality might expect that the mechanisms embedded in those environments will restrict the variations of quality of the assurance services.In such a setting, these boards of directors will choose as assurers the firms that traditionally are perceived as high-quality assurance providers (i.e.Big-4 providers).Hence: H2b: Companies with high quality board monitoring and operating in countries with strong economic, legal, and social environments, are more likely to choose Big-4 firms as the assurance providers of their sustainability disclosures.
An overview of the research model is presented in Figure 1.

Sample and methodology
Our initial sample consists of 3864 companies that issued sustainability reports from 2010 to 2020, which we identified via the Thomson Reuters Asset4 database.We collected financial data from the Thomson Reuters Datastream database and those on country factors from Isidro et al. (2020).After merging the datasets, we are left with a sample of 16,912 observations (for 2271 firms).When examining the choice of assurance provider, the sample includes 7650 observations (for 1296 firms).The sample used to test the choice of assurance provider is smaller because it excludes all those observations in which firms choose not to assure their reports.
Since firms can decide on the assurance provider of their sustainability report only after they have decided to assure the report, we use a logistic regression model with four equations to test our hypotheses.First, to test H1, we model companies' decisions regarding whether to assure their reports (equation 1).Second, we model companies' choice of assurance provider (equation 2).To test H2a and H2b, we expand equations 1 and 2 by including interaction effects.The initial model is as follows: (2)

Dependent variables
In the first equation, the dependent variable is the log-odds ratio, based on the probability of Assurance being coded as 1, which happens when the sustainability report is assured, and 0 otherwise.In the second equation, the variable of interest is Assurance_Provider.This variable is initially Big-4, an indicator variable, coded as 1 if assurance is provided by a Big-4 firm and 0 otherwise.Additionally, we assess four other types of assurance providers: (i) Engineering is an indicator variable, coded as 1 if the assurance is provided by an engineering firm and 0 otherwise; (ii) Consulting is an indicator variable, coded as 1 if the assurance is provided by a consulting firm and 0 otherwise; (iii) Accounting is an indicator variable, coded as 1 if the assurance is provided by an accounting firm (other than a Big-4 firm) and 0 otherwise; and (iv) Expert is an indicator variable coded as 1 if the assurance is provided by an individual expert and 0 otherwise.Figure 2 depicts the different types of assurance providers.

Independent and control variables
The first set of independent variables, which includes six variables, represents the corporate governance attributes of the board of directors that proxy for good monitoring (BoD Monitoring).We expect these proxies to be positively associated with the choice of assurer considered by the board of directors to enhance the legitimacy of the firm's disclosures.First, the size of the board (BoD_Size) denotes the number of directors on the board, has been used in prior studies to explain companies' sustainability performance (Rao et al. 2012, Jizi et al. 2014) and is usually associated with a representation of diversified stakeholders' interests (Jizi Accounting and Business Research 2017).Liao et al. (2018) found that a larger board size among Chinese firms positively affects companies' decisions to assure their sustainability reports.Second, we consider the number of times the board meets per year (BoD_Meet).This variable proxies for board activity level and diligence (Vafeas 1999, Carcello et al. 2002, Laksmana 2008), as frequent board meetings improve management monitoring (Masulis et al. 2012).Third, the separation of the CEO and board chairperson positions (CEO_Sep) is essential to ensure that the board effectively performs the monitoring function (Cohen et al. 2002) and can lead to better governance over sustainabilityrelated issues (Galbreath 2009).When the CEO holds both positions, the board's independence, accountability, and transparency are reduced (Michelon and Parbonetti 2012).Fourth, we consider the proportion of women on the board (BoD_Women).Many studies have examined the impact of gender diversity on boards, finding that it is positively related to sustainability performance (Webb 2004, Ben-Amar et al. 2017) and the choice of an accounting firm as an assurance provider (Liao et al. 2018).Fifth, we use the percentage of independent board members (BoD_-Indep) to reflect the extent to which board members can control potential unethical conduct (Dah and Jizi 2018), directing companies' resources to improve their sustainability strategies and reporting (Helfaya andMoussa 2017, Jizi 2017).Finally, we consider the existence of a sustainability committee via an indicator variable (Sust_Comt), which has been associated with an increase in companies' environmental reporting (Ienciu et al. 2012, Giannarakis 2014).Moreover, Peters and Romi (2015) indicated that the presence of sustainability experts on the environmental committee is positively associated with a company's sustainability assurance decision.
Alternatively, we capture the board of directors' monitoring quality using our own governance score (Std_6BoD), which is the result of the sum of the standardised version of the six board attributes described.This alternative specification allows us to assess the robustness of our findings.
We control for other variables that, according to prior research, should be associated with assurance choices and legitimacy issues.First, we include governance variables (Corporate_Gov) that capture two characteristics of the audit committee: financial expertise (AudC_Exp) and independence (AudC_Indep).For instance, Al-Shaer and Zaman (2018) found that audit committees add credibility to sustainability reporting through their independence, expertise, and oversight.Second, following the literature that has shown that monitoring can come from either internal or external sources, we consider investors' influence by controlling for the holdings of institutional investors (Instit_Inv) and blockholders (Block_Inv) (Alsahali et al. 2021).The final set of firmlevel controls comprises profitability (ROA), size (Size), and leverage (Leverage).Prior research has associated those variables with assurance practices (Simnett et al. 2009).
To test H2a and H2b, we include in our models an interaction effect between our board monitoring quality score and Country_Fact_High, an indicator variable coded as one when the value of the country factor is higher than the median, and zero otherwise.The country factor that we refer to is from Isidro et al. (2020) and consists of a mix of economic, legal, and social variables.Thus, when this indicator variable is coded as one, we believe the country has a strong economic, legal, and social environment.Specifically, we use the first country-level factor identified in Isidro et al. (2020). 4Using a country-level factor is a superior alternative to considering only one country-level variable, as the former allows us to account for several country-level variables concurrently, without problems of codependencies between the set of variables on which it is based.As disclosed in Appendix C of Isidro et al. (2020), factor 1 reflects 35 individual country-level variables, ranging from control of corruption to religiousness, and considering several country-level variables, such as trust, regulatory quality, and media, that one would expect to be directly related to assurance.We expect to find a positive association between the interaction variable Country_Fact_High and (i) the decision to assure sustainability reports and (ii) the choice of a Big-4 firm as the assurance provider.
To control for possible industry effects, we consider 2-digit Standard Industrial Classification (SIC) codes, which classify industries into nine categories.Following Simnett et al. (2009), we control for mining, manufacturing, utilities, and finance industries. 5A list of all the variables and their definitions is provided in the Appendix.

Descriptive statistics
Table 1 presents the descriptive statistics for all variables, which are winsorised at the 1st and 99th percentiles to reduce the effects of outliers.Observations that correspond to cases in which firms assure their sustainability reports represent almost 53% of the initial sample.Big-4 firms account for 56% of the assured reports, while engineering and consulting firms account for almost 19 and 14%, respectively.Accounting firms and individual experts assure only approximately five percent each.The average board of directors has 11 members and meets nine times per year.Approximately 65% of observations are cases that separate the position of CEO from that of board chairperson.On average, 19% of companies' board members are women.Approximately 62% of board members are independent, and 81% of companies have a sustainability committee.
Table 2 Panel A presents the descriptive statistics by country.The assurance of sustainability reports and use of Big-4 firms vary considerably among countries, highlighting the importance of considering country-level variables in the analysis of the choice of assurance provider.Almost 24% of our observations are from firms in the US, where almost 31% of companies assure their sustainability reports, 21% of which are assured by Big-4 firms.This result can be compared with that of Canada, where a slightly higher percentage of sustainability reports are assured, but 73% of these assured reports are assured by Big-4 firms (well above average).Japan presents a very different scenario, as 72% of the reports among firms in the country are assured, but only 31% of these assured reports are assured by Big-4 firms.Table 2 Panel B presents the descriptive statistics by industry.The assurance of sustainability reports is relatively consistent across industries, ranging from 44% to 59%.The assurance provided by Big-4 firms is 63% in the utilities industry but only 51% in the manufacturing industry.
Table 3 presents the Pearson correlation matrix.There are positive and significant correlations between Big-4 and BoD_Size, BoD_Meet, CEO_Sep, BoD_Women and Bod_Indep, which provide initial evidence supporting H1.Moreover, there are positive and significant correlations between (i) Assurance and (ii) Big-4 and Country_Factor.The small pairwise correlation coefficients among the control variables suggest that multi-collinearity is not a major concern in our data. 6To further assess multicollinearity in our regressions, we compute variance inflation factors (VIFs) and find that all values are below 2.5 and thus within acceptable levels.Table 3 provides a correlation matrix for all variables in our model.Detailed definitions of the variables are in the Appendix.The sample contains 2271 firms that issued a sustainability report during the period from 2010 to 2020.Bold for p<0.05.

Main tests
Table 4 Panel A presents the regression results for the impact of the selected board attributes on companies' assurance decisions and the choice of Big-4 firms as assurance providers.The first two columns present the results of estimating the first equation, where column 1 includes the individual board of directors' attributes of interest and column 2 considers the score we create (Std_6BoD). 7As predicted, most of the variables of interest (board size, board meetings, CEO-chairperson separation, women on the board, and the existence of a sustainability committee) are positively and significantly associated with companies' decisions to assure their sustainability reports.The only unexpected result is that board independence is negatively and significantly associated with assurance decisions.In column 2, we find that our governance score is positively and significantly associated with the decision to assure sustainability reports.Thus, overall, good monitoring practices are associated with firms choosing to assure their reports.
Columns 3 and 4 present the results of estimating the second equation when we consider Big-4 firms.Column 3 presents the association between board attributes and companies' decisions to engage with Big-4 assurance providers.There is a positive and significant association between companies' decisions to engage with Big-4 assurance providers and (i) board size, (ii) CEOchairperson separation, (iii) the percentage of women on the board and (iv) board independence.Thus, four out of the six attributes considered support H1, and we conclude that board attributes are significant for assurance decisions and the choice of Big-4 firms.Moreover, it is important to recognise that not all the examined attributes have similar impacts.In column 4 we report a positive and significant association between companies' Std_6BoD and their choice of Big-4 firms, further supporting H1.
The positive and statistically significant coefficients estimated for the country-level factor indicate that firms operating in countries with strong economic, legal, and social environments are more likely to provide assurance and to choose Big-4 firms as their assurance providers.This result is found both when we consider the governance attributes separately and when we consider our standardised score, indicating robustness.
Finally, we report that the four industries we consider individually (mining, manufacturing, utilities, and finance) have a higher probability of assurance than do the remaining industries, with mining having the highest coefficient (possibly because it is an environmentally sensitive industry), revealing the existence of strong industry-level effects.However, such consistency of results is not found in regard to the choice of a Big-4 firm as the assurance provider.In fact, we find that while mining companies have a higher probability of choosing Big-4 firms as their assurance providers than do other sectors, in the case of manufacturing firms, the opposite is true (i.e.Big-4 firms have a lower probability of being selected).
Table 4 Panel B presents the results for board attributes and companies' choice of different types of assurance providers (other than Big-4 providers).As in Panel A, we present the results for the individual board of directors' attributes and for our governance score.These results indicate that when we carefully classify assurance providers, there is a wide variety of determinants.First, we find that an engineering firm is more likely to be chosen if there is a sustainability committee.Engineering firms are recognised for their technical subject matter expertise and their understanding of complex sustainability processes (Farooq andDe Villiers 2019, Alsahali andMalagueño 2022).As sustainability committees oversee the development and implementation of sustainability strategies and policies, assurance providers with higher technical information Table 4 Panel A presents the results of logistic regressions examining the association between board attributes and (i) companies' decision to assure sustainability report and (ii) their choice of Big-4 assurance provider.The analysis is performed on a sample of 2271 firms that issued a sustainability report during the period from 2010 to 2020.Detailed definitions of all variables are in the Appendix.*** p<0.01, ** p<0.05, * p<0.10.Table 4 Panel B presents the results of logistic regressions examining the association between board attributes and companies' choice of different types of assurance providers.The analysis is performed on a sample of 1,296 firms that issued an assured sustainability report during the period from 2010 to 2020.Detailed definitions of all variables are in the Appendix.*** p<0.01, ** p<0.05, * p<0.10.may be deemed better suited for their firms.Another important insight is that firms have a higher probability of choosing an expert as the assurance provider when their number of board meetings is higher.A high number of meetings may signal that there are problems to be discussed (Vafeas 1999), which may lead to the increased need for an expert.Furthermore, firms operating in countries with stronger economic, legal, and social environments are more likely to choose an expert assurer.Thus, in these environments, the Big-4 are not the only preferred type of assurer.Finally, regarding industry effects, we find that a mining firm has a higher probability of choosing an engineering company as its assurer, which may be due to its need to understand the technical aspects of mining operations.
Next, we separately assess observations from stakeholder-and shareholder-oriented countries.The untabulated results for observations from stakeholder-oriented countries are similar to those reported in Panel A of Table 4.When we analyse the observations from shareholder-oriented countries, the determinants of engaging in sustainability assurance are also similar to the findings reported in Panel A of Table 4.However, when we assess the decision to choose a Big-4 firm as the assurer, we find significant differences between the two subsamples, as only two characteristics of the board of directors (CEO-chairperson separation and women on the board) are positively and significantly associated with the choice of Big-4 firms.Moreover, the association between the country factor and the decision to assure and choose a Big-4 firm is negative.When we expand our subsample analysis by considering other types of assurance providers, we also find significant differences between the two sets of results (observations from stakeholder-versus shareholder-oriented countries), confirming our belief that country-level variables are essential for understanding the sustainability assurance market. 8he results of testing H2 are shown in Table 5, as we assess whether there is an interaction effect between the board of directors' monitoring quality and the environment in which firms operate.The results in Panel A show positive and significant coefficients for the interaction variable, indicating that in countries with strong environments, both the decision to assure and to hire a Big-4 firm as an assurer become more likely as firms' board monitoring quality increases.Thus, the results are consistent with our expectations and support our second hypothesis.
In Panel B, we extend our analysis to other types of assurers.As in Panel B of Table 4, none of the coefficients of Stds_6BoD is positive and significant.Additionally, consistent with the previous findings, we find that operating in a country with a developed environment increases the probability of a company hiring an expert to provide sustainability assurance.The coefficients estimated for the interaction variables indicate that in countries with a strong environment, as board monitoring increases, (i) the likelihood of choosing an engineering firm as an assurer also increases and (ii) the likelihood of choosing a consulting or an accounting firm decreases.Thus, there are both complementarity and substitution effects between the two variables included in the interaction.In this panel, we also obtain clearer insights into how the choice of assurer is affected by the industry in which firms operate.In fact, the four industries we individually assess  Table 5 Panel A presents the results of logistic regressions examining the association between board attributes and their interaction with the firms' environment, with (i) companies' decision to assure sustainability report and (ii) their choice of Big-4 assurance provider.The analysis is performed on a sample of 2,271 firms that issued a sustainability report during the period from 2010 to 2020.Detailed definitions of all variables are in the Appendix.*** p<0.01, ** p<0.05, * p<0.10.Table 5 Panel B presents the results of logistic regressions examining the association between board attributes and their interaction with the firms' environment, with (i) companies' decision to assure sustainability report and (ii) their choice of different types of assurance providers assurance provider.The analysis is performed on a sample of 2,271 firms that issued a sustainability report during the period from 2010 to 2020.Detailed definitions of all variables are in the Appendix.*** p<0.01, ** p<0.05, * p<0.10.
have a higher likelihood of choosing an engineering firm as an assurer, while an individual expert has a higher likelihood of being chosen by manufacturing and finance firms.

Robustness tests
Prior studies investigating companies' decisions to issue sustainability reports and provide assurance over their reports suggest that such decisions are sequential (Simnett et al. 2009).These authors used a sequential logit model and suggested that companies' choice of accounting firms as an assurance providers might be affected by the sequential nature of the decisions.In our model, we test companies' assurance decisions and their choice of assurance provider without taking this issue into account.To eliminate any concerns that our results for the choice of assurer are affected by the sequential nature of the decision, we adopt a sequential logit model to test whether such results are consistent with those presented in Panel A of Table 4. Table 6 shows that the results remain unaffected when using the sequential logit model.The presence of endogeneity in a research model can lead to incorrect inferences.To address this issue, we next use the lagged values (i.e. the value of (t−1)) of all board attributes and other explanatory variables in our models.Table 7 Panel A presents the results for the assurance decision and choice of a Big-4 assurance provider using the lagged values of the independent variables.Panel B presents the determinants of choosing other types of assurance providers using the lagged values of the independent variables.Both sets of results in Table 4 are consistent with our hypotheses.
Finally, we rerun our models with GOV_Score, an overall governance score, instead of Stds_6BoD.This overall governance score, from Asset 4, captures a company's capacity to direct and control its rights and responsibilities to generate long-term shareholder value, accounting for board functions, board structure, compensation policy, vision and strategy, and shareholder rights.The untabulated results show that this score is positively associated with the decision to assure sustainability reports and with the choice of Big-4 assurer.These results are consistent with H1 and indicate that a more precise measure of board monitoring (as we create) can be used.

Discussion
In this study, we expand sustainability assurance research by investigating the effect of different board of director attributes commonly associated with monitoring quality and the combined effect of this monitoring quality and legal, economic, and social environments in which firms operate on firms' decision to assure their sustainability report and hire a Big-4 assurer.Complementarily, we assess how these attributes impact the choice of four other types of assurance providers.Overall, we find evidence of a positive association between the attributes of boards of directors, companies' decisions to assure their sustainability reports, and the likelihood of choosing a Big-4 assurer.Additionally, we find that companies with boards of directors with high monitoring quality and that operate in countries with strong economic, legal, and social environments are more likely to engage in sustainability assurance and choose Big-4 assurers.
Drawing on legitimacy theory, our study expands the prior literature by using a large and recent international sample to (i) re-examine how the board of directors' monitoring quality impacts a firm's decision to assure its sustainability report, (ii) comprehensively investigate how the attributes of the board of directors impact the choice of assurance provider, and (iii) examine the impact of country-level characteristics.Thus, we contribute to the literature that brings together legitimacy and corporate governance and the dependencies between organisational attributes and institutions.
We provide evidence that boards of directors' monitoring quality, proxied by board attributes, is positively associated with sustainability assurance practices.For example, unlike Liao et al. (2018), who found a positive association between the number of women on the board and accounting assurance (both by Big-4 and non-Big-4 firms) in China, the statistical analyses of our international sample indicate that the number of women on the board is positively and significantly associated only with the choice of Big-4 firms.This finding suggests that a higher percentage of women on the board increases their influence on the decisionmaking process related to the choice of assurance provider and that women are more likely      to choose a more conservative assurance provider.Additionally, our results show that the existence of a sustainability committee increases the likelihood of companies engaging in voluntary assurance.This result unveils new trends in the decision-making process of sustainability committees, as prior evidence obtained from data gathered at the beginning of the last decade (i.e.2012) found a negative association between the existence of a sustainability committee and the decision to assure sustainability reports (Al-Shaer and Zaman 2018).Furthermore, this study expands the previous literature on the moderating effects of countries' institutional differences on the relationship between board attributes and strategic decision-making (Oehmichen et al. 2017).We show that a strong economic, legal, and social environment reinforces the effects of better monitoring quality of the board on the choice of assurance provider as a mechanism for legitimacy.
Finally, we provide evidence that the use of a dichotomous approach to the classification of assurance providers leads to an incomplete understanding of firms' choices.There is a clear difference in the perceived value of Big-4 firms versus that of other types of accounting firms in regard to sustainability assurance.This finding is consistent with the auditing literature, which differentiates Big-4 firms from other accounting firms (Audousset-Coulier 2015).Our results suggest that this differentiation between Big-4 and other types of accounting firms can be extended to the sustainability assurance market.Therefore, the choice of a Big-4 assurance provider is not just due to its expertise in financial audits but also influenced by its perceived high quality, well-known brand name and global reach.
Regarding non-accounting firms (i.e.engineering and consulting firms, and experts), the results are inconsistent among the three types of assurers we have considered.This lack of consistency suggests that each type of assurer is perceived differently by the boards of directors.Thus, grouping these diverse types of assurers under the heading of 'non-accountant' is not appropriate, and may lead to mixed results across studies, or even incorrect conclusions.Based on our findings, we suggest that future research examine the important of engineering firms in the assurance services market.

Conclusions
Sustainability reports are powerful devicesthrough which firms can develop and improve legitimacy.While prior research has indicated that assurance choices are central to the perceptions of the legitimacy of sustainability initiatives, studies addressing such choices have mainly focused on the determinants of voluntary assurance rather than on the choice of assurance provider (e.g.Liao et al. 2018, Wang et al. 2020).Our first set of results fills this gap, providing evidence that the attributes of the board of directors that reflect their monitoring quality are associated with the choices of different assurance providers, extending the literature on sustainability assurance.Board size, frequency of board meetings, CEO separation, proportion of women on the board, and the existence of a sustainability committee affect the choice of assurance provider.Our second set of results provides evidence that the link between assurance decisions and the board of directors' monitoring quality is context specific, which poses a challenge to legitimacy theory.
Table1provides summary statistics for companies' assurance decision and assurance provider types.In addition, the table provides summary statistics for variables used in the model.Detailed definitions of the variables are in the Appendix.The sample contains 2,271 firms that issued a sustainability report during the period from 2010 to 2020.

Table 2 .
Panel A. Descriptive statistics by country Table2Panel A provides summary statistics by country for companies' assurance decision and assurance provider types.The sample contains 2,271 firms that issued a sustainability report during the period from 2010 to 2020.

Table 2 .
Panel B. Descriptive statistics by industry

Table 4 .
Panel B. Corporate board attributes and the choice of different types of assurance providers

Table 5 .
Panel A. Board monitoring quality and the environment: assurance and provider

Table 5 .
Panel B Board monitoring quality and the environment: assurance and provider

Table 6 .
Corporate board attributes and the choice of Big-4 assurance provider (sequential logit model).

Table 6
presents the results of sequential logistic regressions examining the association between board attributes and (i) companies' decision to assure sustainability reports and (ii) their choice of Big-4 assurance provider.The analysis is performed on a sample of 2,271 firms that issued a sustainability report during the period from 2010 to 2020.Detailed definitions of all variables are in the Appendix.*** p<0.01, ** p<0.05, * p<0.10.

Table 7 .
Panel A. Corporate board attributes and the choice of Big-4 assurance provider (lagged independent variables)

Table 7
Panel A presents the results of logistic regressions examining the association between lagged board attributes and (i) companies' decision to assure sustainability reports and (ii) their choice of Big-4 assurance provider.The analysis is performed on a sample of 2,271 firms that issued a sustainability report during the period from 2010 to 2020.Detailed definitions of all variables are in the Appendix.*** p<0.01, ** p<0.05, * p<0.10.

Table 7 .
Panel B. Corporate board attributes and the choice of different types of assurance providers (lagged independent variables)

Table 7
Panel B presents the results of logistic regressions examining the association between lagged board attributes and companies' choice of different types of assurance providers.The analysis is performed on a sample 1,296 firms that issued a sustainability report during the period from 2010 to 2020.Detailed definitions of all variables are in the Appendix.***p<0.01,**p<0.05,*p<0.10.