Sustainability Reporting: The Role of 'Search', 'Experience' and 'Credence' Information
Accounting Forum, 37(3), 231-243, DOI 10.1016/j.accfor.2013.04.006
Posted: 13 Jun 2013 Last revised: 4 Sep 2014
Date Written: 2013
Corporate sustainability reporting quality has been frequently criticised as being unbalanced, presenting an overly positive view or failing to address material issues. The purpose of this article is to provide a fresh explanation for poor quality sustainability reporting and to propose how quality issues may be addressed. The theoretical framework combines the legitimacy and accountability perspectives using Akerlof’s (1970) Market for Lemons theory. Akerlof’s approach is extended by differentiating between three types of information in sustainability reports namely search, experience and credence. The article concludes that the type of information must be considered when determining measures to improve report quality.
Keywords: Sustainability reporting, Akerlof’s Market for Lemons, Legitimacy theory, Accountability theory
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