The quality of assurance reporting of non-financial information in voluntary and mandatory contexts: a comparison between large listed companies in Finland and France

The assurance of non-financial information reported by companies is regulated in only very few countries, including France (“the Grenelle II Act”), but the effects of these regulations are mostly unknown. Understanding these effects is important, however, so that such regulations can be as effective as possible. The purpose of this study is to improve this understanding by producing new knowledge about how the quality of non-financial assurance reporting is associated with voluntary and mandatory contexts – in this case, Finland and France, respectively. A total of 50 large companies were included equally from both examined countries, based on the component listings of the OMXH25 and CAC40 stock indices. The examined period covers the years from 2010 to 2015 so that possible effects of the Grenelle II in France – which became effective as of 2012 – could also be assessed. During this period, a total of 101 assurance reports from Finland and 133 from France were observed and examined. For the assessment, individual quality indicators were identified based on existing knowledge. These indicators were then divided into five distinct categories to ease drawing tangible conclusions. The utilized approach was new in this particular research field and attempted to remedy the shortcomings of earlier approaches. Overall, the results indicate that the amount of reports seemed notably higher in France from 2012 onwards, as expected, most likely due to the Grenelle II Act. However, the quality of reports seemed notably higher in Finland throughout the examined period. A detailed assessment of individual quality indicators demonstrated that report quality in France seemed to have improved in certain areas, especially from 2012 onwards. Similar observations were not observed in Finland. This suggests that the changes observed in France may be due to the Grenelle II, but this cannot be stated with certainty, as other factors may have also played a role. Additional observations made based on the gathered data also suggest that the quantity and quality of the assurance reports may be explained – at least partially – with company size and scale of operations as well as country-specific factors, as has been suggested, at times, in previous studies. Regarding the possible relevance of the type of industry, significant patterns were not observed. In addition to the summarized results, this study offers three major contributions. First, it improves the scarce knowledge about how assurance reporting quality is manifested in distinct contexts and, consequently, identifies multiple suggestions on how to improve that quality. Second, this study presents a new, developable method to assess assurance report quality. And third, this study offers useful insights about how similar quality assessments could be improved in the future. The results of this study should be reliable. Both a sufficiently large sample size and a relatively lengthy period were utilized to assess the quality of assurance reports – and changes thereof – in both countries. The research method was very thorough and seemed valid overall. Also, several needs for future studies were identified.