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Carbon accounting quality: Measurement and the role of assurance

Brandon Gipper¹; Fiona Sequeira²; Shawn Shi³

¹ University of Notre Dame · ² Stanford University · ³ Ross University School of Medicine

We examine whether external assurance improves the quality of firms’ carbon accounting. We develop a measure of carbon accounting quality based on the deviation of reported emissions from a model-based expected level and supplement it with two survey-based measures. We show that assurance is associated with higher carbon accounting quality. This association is stronger when firms have weaker pre-existing carbon accounting systems and when assurance is more thorough. Consistent with assurance enhancing quality, assurance relates to the identification of issues in a firm’s carbon accounting system, along with fewer omissions and more revisions of prior disclosures. Exploiting mandated assurance for non-financial reporting in three E.U. countries, we show that firms experience post-regulation increases in carbon accounting quality. Together, the findings highlight the importance of assurance for reporting firms that are improving their carbon accounting quality.

DOI

10.1016/j.jacceco.2025.101849

Volume

81 (2)

Pages

101849

Language

en

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