HahnKhnen2013 Determinantsofsustainabilityreporting Literaturereview SSRN

This is a non-copy-edited version of the article published by the Journal of Cleaner Production.
doi: 10.1016/j.jclepro.2013.07.005 (http://www.sciencedirect.com/science/article/pii/S0959652613004654)
Determinants of sustainability reporting: A review of results, trends, theory, and
opportunities in an expanding field of research
Prof. Dr. Rüdiger Hahn (Universität Kassel, Germany)
and Michael Kühnen (Universität Kassel, Germany)
This is a non-copy-edited / non-final version of the final article published by the
“Journal of Cleaner Production” (doi: 10.1016/j.jclepro.2013.07.005). Please refer to the
final version published on
http://www.sciencedirect.com/science/article/pii/S0959652613004654!
Abstract
Since the end of the 1990s, sustainability reporting has become an increasingly relevant topic
in business and academia. However, literature is still limited in quantity and no major reviews
of the latest developments have thus far been presented. This paper provides a review of 178
articles dating from 1999 to 2011 from journals related to business, management, and
accounting. Our aim is to identify what determinants of sustainability reporting are examined
in the literature and to identify (in)consistencies, gaps, and opportunities for future research.
We specifically illuminate factors influencing the adoption, the extent, and the quality of
reporting. Based on our findings we provide an otherwise often missing link to theory
(especially legitimacy, stakeholder, signaling, and institutional theory). Finally, possible
future research themes are discussed by illuminating gaps and underexposed themes in the
area of regulation and governance as well as reporting quality and stakeholder perception.
Keywords
sustainability reporting, literature review, determinants, corporate social responsibility
reporting, double bottom line, triple bottom line, integrated reporting
Abbreviations
DBL Double bottom line
GRI Global Reporting Initative
TBL Triple bottom line
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Determinants of sustainability reporting: Reviewing results, trends, theory, and
opportunities in an expanding field of research
1. Introduction
A diverse set of stakeholders (e.g., employees, customers, suppliers, creditors, advocate

groups, public authorities) pursuing different economic, environmental, and social interests
determines the success of an organization (e.g., Buchholz and Rosenthal, 2005; Laplume et
al., 2008). An important channel through which organizations 1 try to meet these demands is
sustainability reporting. By disclosing sustainability information private companies, for
example, aim to increase transparency, enhance brand value, reputation and legitimacy,
enable benchmarking against competitors, signal competitiveness, motivate employees, and
support corporate information and control processes (Herzig and Schaltegger, 2006).
Furthermore, sustainability reporting is being increasingly recognized as an important factor
contributing to corporate sustainability (Lozano and Huisingh, 2011). Thus, it is not
surprising that the topic receives ever growing attention in business and academia.
From a historical perspective, the development and focus of sustainability-related reporting

has seen several shifts (Fifka, 2012; Kolk, 2010). In the 1970s, traditional financial reporting
in Western countries was sometimes complemented by additional social reports. In the 1980s,
the focus shifted towards environmental issues such as emissions and waste generation often
replacing prior social reporting. By the end of the 1990s, reporting research and practice
increasingly began to consider the social and the environmental dimension simultaneously in
a joint report which is often published alongside traditional financial reports. This trend can
be directly linked to the development of voluntary standard-setting by the Global Reporting
Initiative (GRI) (Kolk, 2010; Vormedal and Ruud, 2009). Today the GRI is regarded as “the
de facto global standard” (KPMG, 2011: 20; emphasis in original) for sustainability reporting.
However, in spite of the standardization efforts, significant differences remain between
companies from different institutional environments with regard to the content and quality of
sustainability reports (Fortanier et al., 2011), implying variations in the global academic
1
This article reviews research on sustainability reporting in general. Thus, we do not focus on research that was
conducted on private companies only. However, most research on sustainability reporting to date was carried out
in the realm of private actors (i.e., companies). From now on we use the terms “company” or “firm” when
specifically focusing private actors or when discussing research that was conducted on companies. In most cases,
however, conclusions can be conferred and both terms can be used interchangeably.
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interest as well. Nevertheless, the literature is still limited in quantity and no major reviews of
the latest developments have been presented so far.
There have been some recent attempts to examine the field of sustainability-related reporting.
However, they were mainly conducted from a specific focus on accounting (not reporting)
issues (Berthelot et al., 2003; Burritt and Schaltegger, 2010; Deegan and Soltys, 2007; Lee
and Hutchison, 2005; Owen, 2008; Parker, 2005, Spence et al., 2010). These reviews are
limited for three additional reasons: They did not disclose a rigorous method of literature
review (Burritt and Schaltegger, 2010; Lee and Hutchison, 2005; Owen, 2008; Parker, 2005;
Spence et al., 2010), they are restricted to very few (usually accounting) journals or even
articles (Burritt and Schaltegger, 2010; Deegan and Soltys, 2007; Owen, 2008; Parker, 2005)
and/or they specifically focused on single issues (Berthelot et al., 2003; Deegan and Soltys,
2007; Lee and Hutchison, 2005). Beyond accounting journals, only two other reviews could
be found. Starting with literature from the 1970s, Fifka (2013) reviews empirical research on
corporate social responsibility (CSR) reporting and examines whether researchers from
different regions apply different methodological approaches and therefore come to different
results. Fifka (2012) aims at providing insight into the chronological development and
characteristics of empirical research on sustainability-related reporting in the last 40 years. In
contrast to the latter two, we will specifically investigate contemporary empirical and
conceptual research starting with the year 1999 when the first version of the GRI
sustainability reporting guidelines was published. By confining to more recent scientific
publications on sustainability reporting dating from 1999 to 2011, our review is not
influenced by historical changes in the corporate and societal environment. Instead it provides
an up-to-date portrait of today’s research landscape of sustainability and CSR reporting. To
achieve this, a structured search for literature was conducted.
We contribute to literature by answering the question “what are general trends and relations in
extant literature?” We specifically distinguish factors which influence the adoption, the
extent, and the quality of reporting because these proved to be the main themes in
contemporary studies. We identify the few determinants (most notably company’s size,
visibility, and sector-affiliation) that are covered by a significant amount of studies and show
consistent results which allow clear conclusions. Furthermore, we contribute by offering
detailed insights on (in)consistencies with regard to other determinants such as profitability or
indebtedness. Based on our findings, we provide a detailed link to theory which is often
missing or only rudimentary existing in extant research (Hooghiemstra, 2000; Spence et al.,
2010). Specifically, we discuss the usability and potential contribution of legitimacy,
3
stakeholder, signaling, and institutional theory for future research. Finally, we contribute by
introducing a set of potential research themes by providing an overview over gaps and
underexposed themes in extant research especially on the influence of managerial attitudes
and culture, regulation and governance, and in relation to the quality of sustainability
reporting.
The paper is structured as follows: First, the research methodology as well as the basic
terminology is described. Then a descriptive analysis of extant literature is provided
considering the distribution of papers over time, the addressed sustainability dimensions, the
publication outlets, and the methodological approaches. To illustrate the current state of
knowledge we will then specifically address determinants of sustainability reporting and
discuss the main research findings. We continue by providing an in-depth link to theory and
by portraying significant gaps in current research to illustrate opportunities and challenges for
future research before concluding the paper.
2. Research method
A literature review aims at revealing trends, relations, inconsistencies, and gaps in the
literature in order to organize and evaluate existing work in a particular field. Before we turn
to the specific methodological issues we will delineate the basic terminology to establish
understanding of the concepts involved (2.1). For conducting the review we followed the
approach suggested by Fink (2010): In the first step, we selected our research questions,
databases, as well as search terms (2.2). Secondly, we used practical screening criteria to
include or exclude studies from the review (2.3). In the third step, we developed and applied
methodological screening criteria in order to analyze a study’s content (2.4). Finally, we
synthesized and assessed our findings (section 3, 4, and 5).
2.1 Basic terminology
In the following, we will set the stage by picturing a framework of basic terminology and
concepts (see Figure 1).
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INSERT FIGURE 1 ABOUT HERE
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The initial starting point for any considerations on sustainability or CSR reporting lies in the
overarching (normative) concepts of sustainability and CSR. To provide a distinct reference
point we adopt the latest definition of CSR by the European Commission which regards CSR
as “the responsibility of enterprises for their impacts on society … to integrate social,
environmental, ethical, human rights and consumer concerns into their business operations
and core strategy” (European Commission, 2011: 6). Quite similarly, ISO 26000—a
worldwide standard for social responsibility—characterizes social responsibility as
“responsibility of an organization for the impacts of its decisions and activities on society and
the environment, through transparent and ethical behaviour” (International Organization for
Standardization, 2010: 3) while directly referring to the maximization of the contribution to
sustainable development as the “overarching objective for an organization” (p. 10) 2. These
characterizations provide direct links to sustainability thinking. Following the historical
characterization of the World Commission on Environment and Development, which puts
intra- and intergenerational justice in the middle of thinking, Dyllick and Hockerts (2002:
131) define corporate sustainability as “meeting the needs of a firm’s direct and indirect
stakeholders …, without compromising its ability to meet the needs of future stakeholders as
well”. To achieve this goal, companies need “to maintain their economic, social and
environmental capital base” (Dyllick and Hockerts, 2002: 132) which directly refers to
Elkington’s (1997) triple-bottom-line (TBL) thinking. Lozano and Huisingh (2011) present an
even more holistic perspective on sustainability by explicitly including a fourth time-
dimension focusing on “short-, long- and longer-term perspectives.” They propose that there
are dynamic and simultaneous interrelations within and between the TBL dimensions, not
only at certain points in time but also over time. In sum, all four dimensions––including the
time––interrelate at equilibrium. As can be seen from these characterizations, sustainability
and CSR gradually converge (Hahn, 2011) and thus this literature review considers
sustainability (reporting) and CSR (reporting) as consistent concepts.
Based on such a normative grounding, the specific corporate performance in the area of
sustainability and CSR is measured by means of sustainability accounting. Sustainability(-
related) accounting comprises those information management and accounting methods which
aim at the creation of high quality data supporting internal decision-making concerning
corporate sustainability. On the basis of reliable accounting data, sustainability-related
2
Here again, the different focus on “organizations” in general (as by the International Organization for
Standardization) and on “companies” in particular (as by the European Commission) come to the fore. See again
footnote 1 for our perspective on the interchangeable use of both terms.
5
reporting then provides and substantiates information about the status and progress of
corporate sustainability towards internal and external stakeholders through formalized means
of communication (Schaltegger et al., 2006). Although sustainability-related accounting and
reporting have received increasing relevance in business and academia, our focus is on the
latter since the disclosure and the internal/external communication of sustainability
information directly contribute to a company’s supply of critical resources from various
stakeholders (Herzig and Schaltegger, 2006; Deegan, 2002). In this respect, sustainability
accounting makes an indirect contribution because it primarily aims at the internal
measurement of organizational sustainability performance (Lamberton, 2005), thus serving as
a foundation of sustainability reporting.
Current sustainability-related reporting practice is primarily of voluntary nature so that

companies are flexible in experimenting with disclosing information (Chen and Bouvain,
2009). In light of this discretionary latitude, corporate reporting practice has led to an
abundance of labels for recent reports (e.g., Corporate Citizenship Report, Corporate (Social)
Responsibility Report, Sustainable Development Report, Sustainable Value Report, and
Sustainability Report) which also points to the above mentioned similarities of sustainability
and CSR as normative concepts. This is not surprising given the abundance of efforts to
characterize any of the mentioned terms (see, e.g., Dahlsrud, 2008) and we acknowledge this
ambiguity by relying on an extensive keyword search as described below. There is an
increasing trend towards multidimensional reporting (Kolk, 2010) and recently even
integrated reporting (which integrates sustainability information together with traditional
financial information in a single report to provide a holistic picture of value creation over
time) (KPMG, 2011; Integrated Reporting Committee of South Africa, 2011). Nevertheless,
one-dimensional reporting (e.g., Environment Reports, Financial Reports) still remains
existent. However, only those reports that simultaneously include all three dimensions of
sustainability can truly be regarded as “sustainability reporting” while one-dimensional
reports are merely sustainability-related because they cover only isolated aspects of
sustainability. In this sense, so-called “sustainability reports” also often exclude important
aspects especially from the economic pillar which are usually disclosed in separate annual
reports. 3
3
For the sake of consistency, we will from now on use the term “sustainability reporting” when referring to
reporting activities that are related to sustainability-issues since we assume such disclosure to be part of
sustainability reporting activities even if they do not cover the entire range of sustainability dimensions in a
single report.
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The literature on sustainability reporting mirrors this terminological inconsistency. This might
be the case because sustainability reporting guidelines tend to create compartmentalization
among the dimensions of sustainability while overlooking inter-linkages (Lozano and
Huisingh, 2011; Lozano, 2013). Here again, the relevance of the GRI guidelines as a de facto
standard guiding the design of sustainability reports comes to the fore. The guidelines cover
all the mentioned labels for respective reports and offer a unilateral standard for non-financial
reporting which can be voluntarily used by the issuers of the respective reports to achieve
certain standardization in the field. The GRI as a network of experts from different
stakeholder groups thus aims at providing a “globally shared framework of concepts,
consistent language, and metrics” to “communicate clearly and openly about sustainability”
(GRI, 2011b: 3). However, the GRI has a focus on environmental and social issues while
covering only few and rather general economic indicators leaving more detailed and
pronounced rules for reporting on economic issues to existing regulatory frameworks for
financial reporting (e.g., US GAAP, IFRS).
2.2 Selecting research questions, databases, and search terms
Our first objective was to present an overview of the current state of research on sustainability
reporting. We aimed at answering the question of what are general trends and relations and
which (in)consistencies in the results can be identified, and we searched for any major
research gaps. After reviewing about one-third of the literature, we found that a significant
proportion of studies focused on determinants of sustainability reporting. We inductively
refined our aim to identify what determinants are examined in the literature and again
searched for (in)consistencies and gaps.
We selected the Web of Knowledge database because of the extensive coverage of

Anglophone peer-reviewed journals from business, management, and accounting. The
database includes all journals with an impact factor which are (supposedly) the most
important outlets in the field covering 2474 journals across 50 disciplines (Thomson Reuters,
2012) including business (113 journals), finance and accounting (85 journals) and
management (172 journals). To achieve an even broader coverage of journals we
complemented our search by also using the ScienceDirect database which covers more than
2500 journals, including 123 related to business, management and accounting (Elsevier,
2012). In order to cover the research field exhaustively, an extensive search using the
following keywords was conducted: “Global Reporting Initiative”, “GRI”, “social report*”,
“environment* report*”, “sustainab* report*”, “CSR report*”, “responsib* report*”, “non-
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financ* report*”, “TBL report*”, “triple* report*”, “integr* report*”. The keywords were
previously identified and discussed by the two researchers.
2.3 Applying practical screening criteria
The time period was set from 1999 to 2011. The starting year was chosen due to the triggering
effect of the introduction of the GRI guidelines. According to Kolk (2010: 370) “the
emergence of sustainability reports mirrors the development in the field of voluntary
standard-setting where the multi-stakeholder Global Reporting Initiative launched its first
sustainability reporting guidelines in 1999”. Vormedal and Ruud (2009: 209) regard the GRI
as “the most important driver” influencing the growth of sustainability reporting. We
restricted our search to papers written in English. We accepted empirical and conceptual
publications. Following the example of other recent literature reviews (e.g., Seuring and
Müller, 2008; Stechemesser and Guenther, 2012; Kolk et al., 2013), we excluded book
reviews, editorial notes and comments.
In April 2012 4, the last search was conducted resulting in an overall body of 265 peer-
reviewed articles. Each article was screened in order to assess whether its content was
essentially relevant with regards to sustainability reporting. To increase reliability of the
research, the individual papers were checked by both researchers. This process resulted in 178
(= n) papers of essential relevance included in the following review.
2.4 Applying methodological screening criteria
According to Brewerton and Millward (2001), a literature review can be methodologically

considered as content analysis, which can be used quantitatively (e.g., to assess descriptive
aspects) and qualitatively (e.g., to evaluate content criteria). Similar, for example, to Seuring
and Müller (2008), we applied the generic process model by Mayring (2010) containing four
steps of a content analysis:
(1) Material collection: The first step deals with the definition and delimitation of the
material to be collected (see 2.2 and 2.3). Furthermore, we define the single article as the
unit of analysis.
(2) Descriptive analysis: Assessing formal aspects of the material serves as the basis of the
subsequent theoretical analysis. Therefore, the bibliographic data of each publication
4
This date was chosen to include all relevant papers from 2011 that might have been added with a certain time
lag to the databases.
8
were recorded. The content of the papers was further assessed with regard to the
descriptive criteria highlighted in section 3.
(3) Category selection: Structural dimensions are selected, forming the major topics of the
content analysis. We independently searched the literature for recurring patterns in
research. These patterns were used to inductively identify structural categories as the
major topics of analysis from the material. After reviewing about one-third of the
literature, we found that a significant proportion of studies focused on factors determining
the adoption, extent, and (to a lesser extent) quality of sustainability reporting. Therefore,
we inductively refined our aim to identify what determinants are examined in the
literature. Consequentially, we asked the following questions for the selection of our
structural categories (which were also used to code the data): Which determinants
influencing the adoption, extent, and/or quality of sustainability reports are addressed?
What kind of influence (positive/negative/none) do these determinants exert on the
adoption, extent, and/or quality of sustainability reports? Additionally, we searched for
further topcis, (in)consistencies, and gaps in the literature.
(4) Material evaluation: In the final step, the whole material is scrutinized according to the
structural categories allowing the identification of relevant themes and interpretation of
findings. The underlying approach thus was a hermeneutic and iterative process including
multiple interplays of critically reflecting the data, searching for research patterns, and
questioning and refining the categories for reviewing the literature.
The synthesis of our findings as final step of a systematic literature review process (Fink,
2010) is presented in the following chapters.
2.5 Limitations and rigor of the research process
The research process and the related qualitative methodology are not without limitations.
According to Saunders et al. (2012) objectivity can be achieved by avoiding (conscious) bias
and subjective selection during the research process. To ensure objectivity, we adhered to a
systematic and structured process as illustrated above. A limitation can be seen in the
selection of databases. However, relying on two major databases should ensure a broad range
of articles. Confining the search process to Anglophone articles can also be regarded as
limitation. Nevertheless, English is the dominant language used in management and
accounting research so that it is unlikely that we missed major findings due to language
issues. Furthermore, while we argue that a period of 13 years is a substantial basis from which
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we draw our conclusions, we acknowledge that studies have been published before 1999, the
starting year for our review.
Validity can be considered as the extent to which a research method accurately measures what
it intends to measure (Saunders et al., 2012). We aimed for validity by following the specific
guidelines of Fink (2010) because they have already been used to conduct literature reviews
by various researchers (e.g., Seuring and Müller, 2008; Stechemesser and Guenther, 2012).
Therefore, we deemed these guidelines suitable and valid for conducting a literature review.
Furthermore, selecting the Web of Knowledge database particularly contributes to validity
due to its extensive coverage of high-impact peer-reviewed journals because concentrating on
peer-reviewed articles is deemed beneficial with regards to validity (Podsakoff et al., 2005).
Reliability is achieved if a research method repeatedly (consistently) generates the same

results on other occasions or if other researchers draw the same conclusions from the raw data
(Saunders et al., 2012). We addressed reliability by including two researchers in the analysis.
While this is admittedly a minimum requirement, an inclusion of further researchers was
deemed unrealistic due to the time consuming process.
Generalizability describes the extent to which research findings can be transferred to settings
other than the original research setting (Saunders et al., 2012). Although we aimed for
generalizability of our findings by applying an extensive keyword search using two major
databases thus covering the field exhaustively, we do not claim that our findings can be
generalized beyond the reviewed literature body.
3. Descriptive analysis
108 articles were published in journals related to business ethics or social, environmental, and
sustainability topics; 35 by journals from the accounting and finance discipline; another 35 in
journals from the area of general business and management or in other specialty journals.
Only seven journals published five or more articles (Journal of Business Ethics (28),
Corporate Social Responsibility and Environmental Management (18), Journal of Cleaner
Production (12), Business Strategy and the Environment (9), Critical Perspectives on
Accounting (9), Australian Accounting Review (5), Environmental Management (5)). Overall,
the distribution reflects the broad acceptance of sustainability reporting across journals
covering a variety of topics.
3.1 Distribution over time and sustainability dimensions
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Figure 2 illustrates the distribution of publications according to sustainability dimensions. 5

The number of papers increased continuously over the years. Interestingly, despite the
existence of social and environmental reporting in the 1970/80s (e.g., Fifka, 2012; Kolk,
2010), the growth of sustainability reporting in the new millennium seems to have invigorated
the entire field of research. Three significant increases of publications (in 2003, 2008 and
2011) follow respective updates of the GRI guidelines (G2-version in 2002, G3-version in
2006 and G3.1-version in early 2011).
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Five categories were used to classify the papers. Only twelve papers (~7%), summarized in
the category “social”, explicitly address reporting on social aspects (i.e., human resources,
labor practices, occupational health and safety, child labor, human rights, community impacts,
customer safety). The “environmental” category encompasses 50 papers (~28%) that address
reporting on environmental issues (i.e., climate change, greenhouse gas emissions,
environmental management practices). Apart from some fluctuations, the number of articles
focusing on the environmental dimension stagnates since 2007. In contrast, the number of
papers addressing double bottom line issues (DBL, i.e. integrating social and environmental
aspects) in sustainability-related reporting has increased continuously. In sum, we counted 64
DBL oriented papers (~36%). From a conceptual perspective, however, all papers that either
cover only one dimension of sustainability (environmental or social) or that study DBL
aspects in sustainability-related reporting technically fall short of a holistic view on
sustainability reporting since they exclude the economic pillar.
The articles that deal with truly integrated sustainability reporting (including financial
aspects) were marked as “TBL” (triple bottom line). Taking into account that such integrated
reporting is still in its infancy (KPMG, 2011), it is remarkable that many researchers claim to
address reporting from a TBL perspective. A closer look reveals that most of them actually
use the term “TBL” merely as a “buzzword”. Only four papers (~2%) truly address aspects of
integrated TBL reporting (Adams and Simnett, 2011; Azapagic, 2004; Lewis, 2011; Lozano
and Huisingh, 2011). Others, however, focus heavily on environmental and social issues
5
The economic dimension was not separately examined since we assumed it to be covered in research on
financial reporting.
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instead of addressing integrated reporting or inter-linkages between all three dimensions of

sustainability (e.g., Archel et al., 2008; Husillos-Carqués et al., 2011; Kent and Monem, 2008;
Skouloudis et al., 2009). Consequentially we categorized them as DBL. One reason for a
largely missing TBL orientation in both practice and research might be that sustainability
reporting guidelines such as the GRI guidelines still tend to address the economic,
environmental, and social dimensions of sustainability in isolation from each other, thus
creating compartmentalization and disregarding synergies and inter-linkages among the
dimensions (Lozano and Huisingh, 2011; Lozano, 2013). The remaining 48 papers (~27%)
discuss further “other” issues such as assurance and stakeholder engagement in relation to
sustainability reporting so that they do not specifically relate to any sustainability dimension.
3.2 Distribution according to research methods
The methodologies applied by the reviewed papers are depicted in figure 3. They can be
divided into non-empirical 6 and empirical approaches. Empirical studies consist of document
analyses, interviews, surveys, models, and experimental studies.
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Non-empirical papers account for approximately 27% of the relevant literature. From the
empirical studies, only document analyses show a significant increase over time (~58% of the
overall literature body). The rest of the studies include interview techniques (~6%), surveys
(~4%), estimation models (~4%), and experimental designs (~1%). The dominance of
document analyses implies a neglect of more exploratory and confirmatory approaches, such
as interviews, surveys, and experimental studies and warrants a closer look. The number of
document analyses increased considerably over the years. This goes along with the rise in
published sustainability reports (GRI, 2011a) providing easy access to an abundance of data,
which explains the popularity of this research method from a practical perspective. Figure 4
provides an overview of investigated media in document analyses. The increasing usage of
stand-alone sustainability reports is consistent with findings by Kolk (2010) stating that, while
in 1999 no report could be referred to as a sustainability report (but rather as isolated social or
6
Of the non-empirical papers only one classifies as a literature review (Spence et al. (2010)). All others are
conceptual papers. The review articles mentioned in the introduction were not identified by our search since they
were not covered by our keywords (i.e., not referring to reporting but rather to accounting), in one case date
from after 2011, or were not included in the databases.
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environmental report), it is now the dominant form of sustainability-related reporting.

However, annual reports still belong to the most widely-analyzed media. This may be due to
the increasing integration of environmental and social aspects into annual financial reports
since the mid-1990s and the ongoing establishment of integrated reporting (Daub, 2007).
Furthermore, annual reports can be considered relatively standardized and institutionalized
(Hanson and White, 2003), thus facilitating research. Websites are increasingly addressed
which reflects a growing popularity of this reporting format (Holder-Webb et al., 2009).
Codes of conduct and press releases used as complementary sources of information in some
studies can be considered to be of minor importance for researchers.
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4. Findings on determinants of sustainability reporting 7
Research on the variables affecting the adoption of sustainability reporting mainly deals with
the decision or likelihood to engage in reporting. Research on the extent of reporting generally
addresses the volume or amount of reporting (i.e., the quantity of disclosed information based
on keyword-, sentence- or page-counts in order to identify major themes discussed in
sustainability-related reports). Research on the determinants of the quality investigates, for
example, the provision of information ranging from rather narrative and descriptive disclosure
(i.e., “soft” information which is not easily verifiable such as strategy claims) to specific,
quantifiable, and monetary data (i.e., “hard facts” and objective data such as quantitative
performance indicators) and thus asks for the kind of information being conveyed.
4.1 Internal determinants of sustainability reporting
The following paragraph illustrates findings on internal determinants of sustainability

reporting. This encompasses issues of corporate size and financial performance (4.1.1), social
and environmental performance (4.1.2), and ownership structure (4.1.3).
7
Some papers specifically focus on environmental reporting. Most, however, analyze a more extensive
sustainability reporting. Due to our overarching focus on sustainability reporting, we will report on both aspects
together.
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4.1.1 Corporate size and financial performance
Table 1 gives an overview of the most frequently investigated determinants in terms of

corporate size and financial performance. Corporate size (measured by total assets, turnover,
sales, number of employees, or market capitalization) can be considered to have a positive
effect on the adoption and extent of sustainability reporting, assuming that larger companies
cause greater impacts, become more visible, and therefore face greater stakeholder scrutiny
and pressure (e.g., Fortanier et al., 2011; Gallo and Jones Christensen, 2011). Furthermore,
small companies might have higher marginal costs of disclosure (e.g., Haddock, 2005).
Empirical results widely support this thinking. When turning to a company’s financial
performance, research frequently assumes profitability (measured by market returns, return on
assets, or return on equity) to increase the ability and flexibility of a company to bear the costs
of sustainability reporting and/or to cope with the consequences of disclosing potentially
damaging information (e.g., Cormier and Magnan, 2003; Haniffa and Cooke, 2005; Kent and
Monem, 2008). Empirical results, however, are rather mixed. A high level of indebtedness,
leverage, or gearing can be assumed to decrease the ability and flexibility of a company to
bear the costs of reporting and/or face the consequences of disclosing potentially damaging
information (e.g., Cormier and Magnan, 2003; Stanny and Ely, 2008). However, Haniffa and
Cooke (2005) also argue that sustainability reporting might be used to legitimize corporate
activities toward creditors and shareholders, thus providing incentives to engage in reporting.
Empirical research on this determinant provides contradictory results.
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INSERT TABLE 1 ABOUT HERE
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Four other variables are also used as proxies for financial performance. However, they
received far less academic attention. Results are ambiguous for all.
First, a higher market-to-book value (or Tobin’s q) could imply a higher level of information
asymmetry between a company and its investors regarding intangible assets, and future
growth prospects may foster reporting activities in order to help investors to predict future
incomes, thereby reducing capital costs. Only Prado-Lorenzo et al. (2009b) indicate a positive
association between a company’s market-to-book value and the extent of reporting. Others
deny a significant relation to its adoption (Stanny and Ely, 2008), extent (Clarkson et al.,
2011), and quality (Clarkson et al., 2008; Clarkson et al., 2011).
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Second, high capital intensity could also be considered to coincide with more extensive
sustainability reporting, assuming companies want to signal the newness of assets and
technologies and related reductions of environmental impacts such as greenhouse gas
emissions. Only few empirical papers investigate this relation providing mixed results. Stanny
and Ely (2008) deny a significant effect on the adoption of reporting, while Clarkson et al.
(2008) and Clarkson et al. (2011) point to a positive influence on the extent and quality of
reporting. Fortanier et al. (2011) find no significant effect on the level of sustainability
reporting.
Third, reporting may be positively influenced by financing activities on the capital market.
Companies trying to raise capital may consider sustainability reporting as a means to reduce
information asymmetry between a company and its investors, thereby also lowering costs of
capital. Cormier and Magnan (2003) and Clarkson et al. (2008) find a positive effect on the
extent or quality specifically of environmental reporting, whereas Clarkson et al. (2011) and
Cormier and Magnan (2004) indicate no significant influence.
Fourth, Cormier and Magnan (2004) argue that a higher systematic risk (beta or stock price
volatility) as a consequence of an unstable economic performance decreases the ability of a
company to bear the costs of reporting, and therefore predict a negative effect on the level of
reporting. Cormier et al. (2004), Cormier and Magnan (2003), and Cormier and Magnan
(2004) generally confirm this while Clarkson et al. (2008) and Clarkson et al. (2011) find no
significant influence on the extent and quality of reporting.
4.1.2 Social and environmental performance
Comparably little attention has been paid to the influence of social and environmental
performance which is usually measured by the number of fines for environmental
transgressions, by actual pollution discharge data, or by assuming that sustainability
performance is mirrored by certain indices such as the Dow Jones Sustainability Index. On the
one hand, companies may want to signal good performance, implying a positive effect on
reporting. Alternatively, companies with a weaker performance may face greater stakeholder
pressure, thus they may be more actively engaged in reporting to mitigate legitimacy threats
which implies a negative relation between performance and sustainability reporting. Research
results are again inconsistent. Some studies find a positive effect of performance on the
adoption (Belal and Cooper, 2011; Nikolaeva and Bicho, 2011) or extent of reporting
activities (Clarkson et al., 2008), whereas others (Clarkson et al., 2011; Brammer and Pavelin,
2006) indicate that worse performance leads to a higher extent of reporting. The latter study
15
by Brammer and Pavelin (2006), however, simultaneously finds no significant effect on the
adoption of reporting and Prado-Lorenzo et al. (2009b) do not find a significant effect on the
extent. In sum, research points to a significant but ambiguous effect of social and
environmental performance on reporting activities. All papers pay more attention to
environmental rather than social performance which may be due to difficulties in assessing
social performance.
Finally, the age of a company’s assets is also used as a variable related to sustainability
(especially environmental) performance. Assuming that stakeholders might link older fixed
assets (e.g., plants and equipment) with a higher environmental pollution level, a company
with young assets has the incentive to report proactively. Again, empirical evidence offers
mixed results. Stanny and Ely (2008) indicate a negative association between asset age and
the decision to disclose environmental information, whereas Clarkson et al. (2008) and
Cormier and Magnan (2004) find a positive relation to the extent of environmental reporting.
Three other studies do not find a significant relation (Clarkson et al., 2011; Cormier et al.,
2004; Cormier and Magnan, 2003). Only two papers examine the effect on the quality of
environmental reporting, revealing similarly inconsistent results (Clarkson et al., 2008;
Clarkson et al., 2011).
4.1.3 Ownership structure
Some limited research endeavors address several ownership variables such as a company’s
listing on the stock market, government ownership, concentrated or dispersed ownership, and
foreign ownership.
Publicly listed companies can be considered to be more actively engaged in reporting in order
to comply with certain regulations, adopt good practice by competitors, and/or cope with
stakeholder pressure. Haddock (2005) finds that a company’s listing on the stock market is
associated with a higher adoption of reporting practices. Furthermore, listed companies
disclose a higher level of sustainability-related information (Da Silva Monteiro and Aibar-
Guzmán, 2010; Gamerschlag et al., 2011; Haniffa and Cooke, 2005). Moreover, Amran and
Haniffa (2011), Gallo and Jones Christensen (2011), and Tagesson et al. (2009) indicate that
state-owned companies and/or government shareholding is associated with a higher extent of
sustainability reporting assuming that the respective organizations are subject to more
stringent reporting requirements and scrutiny, or because they are supposed to set a good
example. Due to the limited number of studies, one cannot draw definite conclusions on the
influence of a company’s listing on the stock market or on the influence of state ownership.
16
Concentrated ownership—often assumed if an investor owns more than 20% of the

outstanding voting shares—can be considered to impede sustainability reporting since
dominant shareholders are supposed to already have access to relevant information. In
contrast, a dispersed ownership structure increases the need to reduce information asymmetry.
Brammer and Pavelin (2006) indicate that the adoption and quality of reporting is negatively
influenced by a concentrated ownership structure. Cormier and Magnan (2003), Cormier and
Magnan (2004), and Gamerschlag et al. (2011) find the same for the extent of reporting
activities. Others, however, find no significant correlation (Stanny and Ely, 2008 for the
adoption, and Ertuna and Tukel, 2010; Tagesson et al., 2009 for the extent) while only one
study (Prado-Lorenzo et al., 2009a) states a positive influence on the adoption of the GRI
guidelines.
Finally, foreign shareholders might have difficulties obtaining relevant information from
alternative information sources, which induces the need to reduce information asymmetry in
case of foreign ownership. Three studies indicate a positive influence of foreign ownership on
the level of sustainability reporting (Cormier and Magnan, 2003; Cormier and Magnan, 2004;
Haniffa and Cooke, 2005), whereas two others show no significant effect (Da Silva Monteiro
and Aibar-Guzmán, 2010; Ertuna and Tukel, 2010).
4.2 External determinants of sustainability reporting
Research on the external determinants of sustainability reporting mainly covers aspects of

corporate visibility (4.2.1) or sector affiliation, country-of-origin, and legal requirements
(4.2.2).
4.2.1 Corporate visibility
Literature uses media exposure, the supply chain position, and brand-related aspects as
proxies for corporate visibility. When looking at media exposure (for example measured by
the number of news articles related to a company), companies may start sustainability
reporting or increase the depths of their disclosure in order to mitigate reputational risks of
bad press and exploit possible benefits of good press. Literature on this determinant is
summarized in Table 2.
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--------------------------------------------
17
Apart from media exposure, direct interaction with consumers may lead to high corporate
visibility (Groves et al., 2011) so that the supply chain position can also be considered a
determinant of sustainability reporting. Business-to-consumer companies are more likely to
engage in reporting activities (Haddock, 2005) while business-to-business companies display
lower levels of disclosure (Groves et al., 2011). Furthermore, Haddock and Fraser (2008)
show that the extent of reporting depends on a company’s closeness to market. In sum,
however, research on the value chain position as determinant is still scarce.
Finally, a few sporadic research endeavors investigate branding issues as reporting

determinants. Haddock (2005) evaluates the sameness of brand name and company name,
arguing that a company’s profile is more visible to consumers when brand and company name
are identical. In two studies she confirms a positive influence on the adoption (Haddock,
2005) and extent of reporting (Haddock and Fraser, 2008). Nikolaeva and Bicho (2011),
however, do not find an association between brand visibility and the adoption of sustainability
reporting according to the GRI guidelines.
4.2.2 Sector affiliation, country-of-origin, and legal requirements
A company’s sector affiliation is the most frequently addressed external determinant (see
Table 3). Companies from industries with high social and environmental impacts may need to
engage in sustainability reporting in order to respond to sector-specific stakeholder pressure
(e.g., Parsa and Kouhy, 2008; Sotorrío and Sánchez, 2010). Furthermore, sustainability
disclosure may be driven by mimetic tendencies within sectors, which would explain the
presence of reporting activities despite the absence of legitimacy threats or stakeholder
pressure (e.g., Aerts et al., 2006; Husillos-Carqués et al., 2011).
--------------------------------------------
--------------------------------------------
Apart from industry differences, reporting practices may also vary across countries and
regions due to different cultural and social norms or governmental regulations (Sotorrío and
Sánchez, 2010; Golob and Bartlett, 2007). This determinant is, however, subject to only few
studies. Some indicate differences across countries and regions with respect to the adoption
(Buhr and Freedman, 2001) and the extent of sustainability reporting (Chen and Bouvain,
2009; Fortanier et al., 2011; Prado-Lorenzo et al., 2009b), whereas Sotorrío and Sánchez
(2010) find no significant country-of-origin effect on the volume of reporting. Only one study
18
from our sample (Vormedal and Ruud, 2009) finds a country-of-origin-influence on reporting
quality (for a conceptual perspective see Utama, 2011).
In terms of legal requirements, Denmark, Norway, and Sweden, for example, require
companies to report on environmental impacts (Hess and Dunfee, 2007) while French and
British regulation requires certain companies to report on sustainability-related information
(Brown et al., 2009b). Despite this legal pressure, only a few studies empirically examined the
development of reporting in response to regulation (mostly concentrating on environmental
disclosure). They usually confirm an increase in the adoption and extent of (environmental)
reporting following tightened regulation (e.g., Acerete et al., 2011; Criado-Jiménez et al.,
2008 for Spain, Alciatore et al., 2004 for the US, Bubna-Litic, 2008, and Frost, 2007 for
Australia).
4.3 Interim conclusion on determinants of sustainability reporting
The only internal determinant that is consistently found to have a positive effect on
sustainability reporting is company size. Consequently, media exposure and stakeholder
pressure as external determinants are also consistently found to have a positive influence on
sustainability reporting because the size variable can be considered to be linked with
corporate visibility. Overall, research displays a bias toward variables related to a company’s
size and economic and financial performance. However, the frequency of research on
economic and financial performance variables (particularly with regard to capital intensity,
financing activities, and systematic risk) is distorted by the personal interest of certain
researchers (Clarkson, Cormier, Magnan and their co-authors). Moreover, researchers provide
rather consistent evidence for a significant influence of a company’s sector affiliation.
Research on other external determinants is again characterized by inconsistent and ambiguous
findings and also by a significant lack of attention.
Similarly, the influence of variables related to social/environmental performance has thus far
been mostly neglected and the few existing studies provide inconsistent results. The lack of
research is especially pronounced in regard to the quality of reporting. However, we can
cautiously note that research tends to confirm a positive effect of capital intensity, a
company’s listing on the stock market, government ownership, and foreign ownership on
sustainability reporting. On the other hand, a company’s systematic risk and concentrated
ownership structure seem to impede sustainability reporting. Furthermore, research tends to
deny a significant effect of a company’s market-to-book value, financing activities on the
19
capital market, and age of fixed assets. Finally, researchers provide rather inconsistent and
ambiguous findings regarding profitability and indebtedness.
5. Discussion of theoretical implications and research gaps
In the following, we provide a link to theory by proposing an outline of a potential theoretical

framework (5.1) before presenting a set of possible future research streams on
underrepresented areas in extant research (5.2).
5.1 Linking results to legitimacy, stakeholder, signaling, and institutional theory
At the beginning of the reviewed period, Hooghiemstra (2000) argued that research on
sustainability reporting is characterized by diverse and inconsistent findings due to a lack of a
comprehensive theoretical reference point. More recently, Spence et al. (2010) found that
researchers describe stakeholder theory as the dominant and most useful theory in explaining
sustainability reporting practice. However, they also explicitly point to the fact that most
studies refer to stakeholders in general, without explicitly referring to stakeholder theory (or
other theories). Our review confirms this observation. The majority of literature does not refer
to any theory at all, while those studies adopting—or at least considering—a theory show
indeed a preoccupation with stakeholder theory (e.g., Belal and Roberts, 2010; Parsa and
Kouhy, 2008; Reynolds and Yuthas, 2008), legitimacy theory (e.g., Criado-Jiménez et al.,
2008; De Villiers and Van Staden, 2006; Haniffa and Cooke, 2005), and to a certain extent
also institutional theory (e.g., Chen and Bouvain, 2009; Fortanier et al., 2011; Rahaman et al.,
2004). Furthermore, these studies mostly refer to isolated theoretical reference points instead
of more holistically embracing different theoretical explanations with regard to sustainability
reporting. In the following, we propose a combination of different theories to explain the
findings discussed above.
According to legitimacy theory, a company needs to have legitimacy in the sense of a social
“license to operate” (Deegan, 2002) to access the necessary resources to successfully conduct
business. Legitimacy theory suggests that no organization has an inherent right to exist but
that any business operation is subject to a greater acceptance granted by society. Such
legitimacy, however, is potentially threatened if society perceives that a company is not
operating in an acceptable way. Accordingly, legitimation strategies aim at securing
legitimacy as a valuable resource itself (e.g., Dowling and Pfeffer, 1975; Ashforth and Gibbs,
1990; Suchman, 1995).
20
Furthermore, the acceptability of a company in society is directly linked to stakeholder

thinking which argues “that organizations should be managed in the interest of all their
constituents, not only in the interest of shareholders.” (Laplume et al., 2008: 1153) In this
sense, stakeholder theory suggests that businesses have to take into account different
perspectives and expectations of a wide group of constituents having an interest in corporate
activities (Buchholz and Rosenthal, 2005; Laplume et al., 2008). Freeman (1984) argues that
managers need to recognize shifts in the environment among internal and external
stakeholders. The recent trend to embrace sustainability issues in society can be regarded as
such a trend and Marshall et al. (2010: 478) even see a “paradigm shift ... that … incorporates
a sustainability mandate, refuting clearly the old thinking of limitless resources, unbounded
growth, and technologically derived solutions.” Other than traditional financial reporting,
which largely caters to shareholder’s information needs, sustainability reporting (supposedly)
offers valuable information to a broader audience and thus helps to cater to their information
needs by offering explanations of how a company answers to the societal call for sustainable
business conduct. It can be assumed that large numbers of (powerful) stakeholders directly
increase the need for these companies to positively explain their business conduct. In this
context, the disclosure of sustainability-related information can be regarded as an instrument
to shape the perceived legitimacy of the company (Campbell et al., 2003) which, in turn,
builds the bridge to signaling theory.
Signaling theory suggests that in situations of asymmetric distribution of information, one

party tries to credibly convey information about itself to a second party (Spence, 1973;
Connelly et al., 2010). The sustainability performance of a company can be regarded as such
asymmetric information since it is difficult, for example, for parties outside the company to
gain credible information on these aspects. Companies might want to reduce this information
asymmetry by proactively reporting on their sustainability-related activities to ensure
legitimacy. However, whether or not the addressee perceives the given information as
plausible and trustworthy greatly influences the potential effect such signaling efforts have. In
sum, a greater exposure to a large number of (potentially powerful) stakeholders (and media
coverage) could influence a company’s need to actively secure its legitimacy by signaling
sustainability efforts in respective reports.
As outlined above, the positive influence of corporate size on the adoption, extent, and quality
of sustainability reporting is widely acknowledged in previous research supporting the idea
that especially large companies which are exposed to a diverse set of stakeholders feel the
need to engage in signaling activities such as sustainability reporting to secure their
21
legitimacy in society. Similarly, the positive influence of media exposure on the adoption and
extent of reporting is also often mentioned (albeit with a much smaller focus in extant
research) which directly points to the need to engage in signaling. This exposure can also be
assumed to be positively related to corporate size as well as other factors (such as sector-
affiliation) so that the cause-effect relationship between media exposure and corporate size on
the one hand and the three mentioned theoretical anchors on the other hand remains somewhat
ambiguous. Nevertheless, all three theories can indeed help explaining the proliferation of
sustainability reporting in the last decade.
Less clarity, however, exists for aspects of institutional theory which suggests that corporate
activities do not necessarily follow a business rationale but instead answer to the
institutionalized expectations of the environment (Meyer and Rowan, 1977). If this would be
the case for sustainability reporting, the adoption, extent, and quality of sustainability
reporting would gradually align due to institutional isomorphisms (DiMaggio and Powell,
1983) instead of being subject to other external determinants. Research so far, however,
produced mixed results on these aspects (compare, e.g., Chen and Bouvain, 2009 with
Fortanier et al., 2011).
5.2 Underrepresented streams of research – Possible avenues for future research
Beyond the focus on determinants of sustainability reporting there seem to be some major
shortcomings when turning to other topics of potential interest. In the following we will
highlight such gaps in literature by especially discussing issues of regulation and governance
(5.2.1) as well as reporting quality and stakeholder perception (5.2.2). These aspects can at the
same time be regarded as a possible roadmap for future research.
As a general remark we noticed that there is a strong focus in the reviewed literature on large
and multinational enterprises. Merely eleven papers address small and medium-sized
enterprises and only three of them (Borga et al., 2009; Fassin, 2008; Parsa and Kouhy, 2008)
do so exclusively. Similarly, only few papers even partially address sustainability reporting by
non-profit organizations such as public authorities and NGOs (Dumay et al., 2010; Guthrie
and Farneti, 2008; Johansen, 2010; Lozano, 2006; Mussari and Monfardini, 2010; Rahaman et
al., 2004).
5.2.1 Research regarding regulation and governance
As discussed above, the influence of country-of-origin and of different regulatory regimes is

sparsely examined. Some papers, however, conceptually explore whether sustainability
reporting may contribute to empowering stakeholders and discuss a (potential) shift of
22
governance to civil society. Hess (2007) and Hess (2008), for example, argue that voluntary
initiatives (such as the GRI) alone are insufficient in achieving corporate accountability
because reporting is driven by strategic considerations (also Laufer, 2003). Similarly,
Dubbink et al. (2008) note an insufficiency of self-governance by companies due to a low
level of transparency, incomplete and irrelevant information for stakeholders, and a lack of
comparability of sustainability reports. Consequentially, the authors emphasize the need for a
basic legal framework in order to promote a level of sophistication comparable with
mandatory financial reporting systems. Hess and Dunfee (2007) suggest a mandatory
sustainability reporting system based on the GRI guidelines to overcome the issue of strategic
disclosure. Levy et al. (2010), however, criticize the GRI guidelines for being too generic,
lacking detailed quantifiable measures, and thus not satisfying the informational needs of
stakeholders. Therefore, they question the contribution of the GRI for shifting corporate
governance to civil society. Some scholars also raise objections to mandatory sustainability
reporting in general due to corporate opposition and a lack of enforcement mechanisms (e.g.,
Brown et al., 2009b, Levy et al., 2010). Considering that developing “a more or less smooth
system” (Dubbink et al., 2008: 402) of mandatory financial reporting has taken a considerable
amount of time, one should take into account that regulation on sustainability reporting is still
at an early stage of development (Hess and Dunfee, 2007). An example of rather progressive
regulation can be found in South Africa where companies at the Johannesburg stock exchange
are required to publish an integrated TBL report, or explain omission (Adams and Simnett,
2011; Integrated Reporting Committee of South Africa, 2011). Moreover, the European
Commission recently intensified its endeavors to introduce mandatory sustainability-related
disclosure (European Commission, 2013). Such new developments warrant future research.
When turning to internal aspects of corporate governance, we identified another research gap.
Certain governance structures, for example audit committees, sustainable development
committees or the presence (or absence) of non-executive or independent directors on the
board might influence reporting. Such structures could signal the intention to be transparent,
accountable, and committed to sustainability (e.g., Haniffa and Cooke, 2005; Kent and
Monem, 2008). From our sample, only Ertuna and Tukel (2010) and Kent and Monem (2008)
discuss the mentioned committees with mixed results, whereas the influence of non-executive
directors is examined by Brammer and Pavelin (2006), Ertuna and Tukel (2010), Haniffa and
Cooke (2005), and Prado-Lorenzo et al. (2009a). This leaves room for further investigations.
Finally, only two papers (Chen and Bouvain, 2009; Fortanier et al., 2011) investigate whether
adherence to global standards such as the GRI, the UN Global Compact, ISO 14001 or others
23
may increase the comparability of sustainability reports by overcoming otherwise existent

variations in reporting practice.
Table 4 provides a brief overview of possible future research streams regarding regulation and
governance and posits related research questions.
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--------------------------------------------
5.2.2 Research regarding reporting quality and stakeholder perception
Few studies specifically examine reporting quality which is a central issue for providing a true
and fair view of a company’s sustainability performance. Although sustainability-related
reporting is not simply about concealing negative activities and issues, several scholars note
that voluntary disclosure allows companies to use sustainability reporting as an impression
management tool to improve a company’s reputation (e.g., Castelló and Lozano, 2011;
Coupland, 2006; Hanson and White, 2003; Hooghiemstra, 2000; Ihlen, 2009; La Cour and
Kromann, 2011; Livesey and Kearins, 2002). In line with this, Holder-Webb et al. (2009) note
that most of the information voluntarily disclosed in sustainability reports sheds a positive
light on the respective company. Consequentially, many reports are criticized for their self-
laudatory, selective, and strategic character (e.g., Archel et al., 2008; Criado-Jiménez et al.,
2008). According to the GRI guidelines, the quality of sustainability reporting and the
materiality of a certain aspect to be reported depend on a balanced reflection of both positive
and negative aspects of a company’s performance (GRI, 2011b). Against this background it is
striking that only a single paper in the literature at hand (Criado-Jiménez et al., 2008)
investigates the disclosure of negative incidents. To fill this gap, future research could apply
content analysis on sustainability reports in order to examine differences in the disclosure of
negative incidents (see recently, Hahn and Lülfs, 2013). Furthermore, researchers might
engage in more exploratory and confirmatory methods such as interviews, surveys, or
experimental studies (see recently, Reimsbach and Hahn, 2013) in order to explore
stakeholder’s perceptions of negative disclosure and its impact on corporate reputation,
legitimacy, share price, reporting quality, and so on.
To enhance the reporting quality, Laufer (2003) emphasizes the necessity of independent
assurance and appropriate stakeholder engagement. Both aspects have only recently received
increasing scholarly attention. This is not surprising since assurance on sustainability
24
reporting is a relatively new field for professionals and scholars (Smith et al., 2011; KPMG,
2011). A few papers conceptually or empirically discuss operational difficulties of assurance
on sustainability reporting (Dando and Swift, 2003; O'Dwyer, 2011 ; Wallage, 2000).
Furthermore, Park and Brorson (2005) examine the typical process, drivers, and obstacles of
such assurance whereas Simnett et al. (2009), Chen and Bouvain (2009), and Kolk and Perego
(2010) identify factors determining the demand for assurance. Only two studies analyze the
contribution of assurance to the perception of the respective reports using experimental
designs. Both find that perceived credibility increases when a sustainability report is assured
and when assurance is provided by professional accountants (Hodge et al., 2009; Pflugrath et
al., 2011).
With regard to the quality of assurance (thus indirectly to the quality of reporting), Smith et
al. (2011) conceptually discuss how managerial influence on the assurance process might
impede credibility and accountability. Additionally, Fonseca (2010) and Manetti and Becatti
(2009) evaluate assurance statements and note problems stemming from a low level of
stakeholder involvement. Thomson and Bebbington (2005: 517) explicitly underline that “the
quality of reporting … is intimately linked to the quality of stakeholder engagement”. It is
noticeable that there are only isolated endeavors addressing this issue. From a conceptual
perspective, Reynolds and Yuthas (2008) conclude that current reporting and accountability
standards enhance transparency but fall short of engaging stakeholders in discourse, whereas
Hess (2008) criticizes corporations for limiting stakeholder engagement to a mere
management of legitimacy risks. Empirical research also indicates that companies hardly ever
involve stakeholders in decision making on the content of reports (Manetti, 2011, Perrini,
2006), which might compromise the materiality and relevance of disclosed information. One
reason might be that businesses are simply not aware of how to deal with certain stakeholders
(e.g., Onkila, 2011), so Habisch et al. (2011) identify a gap between literature and practice
about the importance of stakeholder dialogs with regard to sustainability reporting.
Research on stakeholder pressure and legitimacy aspects as determinants of sustainability

reporting is remarkably scarce. In an early conceptual study, Lewis and Unerman (1999)
propose that varying moral values result in different legitimation strategies and
correspondingly in different reporting patterns in order to fulfill distinctive stakeholder
expectations. In line with this, Buhr (2002) and Husillos-Carqués et al. (2011) infer from
interview data that reporting is initiated following insufficient communication with
stakeholders and a resulting legitimacy crisis or corporate scandals. Golob and Bartlett (2007)
find in a study covering Australia and Slovenia that the content of sustainability reporting is
25
influenced either by shareholder or stakeholder traditions. Furthermore, Sinclair-Desgagné

and Gozlan (2003) estimate in one of the few models in our review that stakeholder pressure
can influence the quality of information (see also the conceptual paper of Utama, 2011).
Despite consistently arguing for a positive association between stakeholder pressure and
sustainability reporting, there is a significant lack of empirical research. Interestingly, the few
existing studies applied methods which were otherwise rather scarce.
Closely linked to these issues is the question of stakeholder perception of sustainability

reporting. The limited number of studies (Belal and Roberts, 2010; De Villiers and Van
Staden, 2011; Johansen, 2010) impedes a proper evaluation of the contribution of
sustainability reporting to corporate accountability. When looking at investors as a specific
stakeholder group, Dhaliwal et al. (2011) argue for the importance of sustainability reporting
in reducing information asymmetry between managers and investors to increase firm value
and decrease cost of capital. The few empirical papers on this aspect consistently confirm this
assumption (Cormier and Magnan, 2007; Dhaliwal et al., 2011; Moneva and Cuellar, 2009;
Schadewitz and Niskala, 2010). Willis (2003) conceptually illustrates the benefits of the GRI
for socially responsible investments by contributing to comparability between companies and
facilitating comprehension of past performance and future prospects. Van den Brink and Van
der Woerd (2004) evaluate the GRI guidelines on their applicability for benchmarking
purposes of rating agencies. In contrast, two other papers discuss limitations of sustainability
reporting towards socially responsible investments with regard to the already mentioned
strategic, selective, and self-laudatory nature of such reports (Fayers, 1999; Laufer, 2003).
Table 5 provides a brief overview of possible future research streams regarding reporting
quality and stakeholder perception and posits related research questions.
--------------------------------------------
--------------------------------------------
6. Conclusions
This paper provided a review of literature on contemporary sustainability reporting from 1999
to 2011 and contributed to literature by giving a broad overview of the results on the (internal
and external) determinants of sustainability reporting. Already the descriptive analysis
revealed noteworthy aspects. First, current literature often still seems far from considering
26
truly complete sustainability reporting on all three dimensions of sustainability. While we

noticed a shift in focus from isolated social or environmental reports to a sustainability focus
on the DBL or recently even on the TBL, the latter is still in its infancy so that there are plenty
of opportunities for future research studying true sustainability reporting beyond
compartmentalization and isolated approaches. Future studies might, for example, look into
the content and quality of integrated reports in order to evaluate whether they contribute to a
more concise and balanced understanding of corporate performance compared to stand-alone
sustainability reports. Second, we noted a strong growth in empirical research (especially
document analysis) which coincides with the growth in published sustainability reports. Our
discussion of findings, inconsistencies, and gaps in the 178 articles mainly focused on internal
and external determinants of sustainability reporting and their impact on the adoption, extent,
and quality of reporting since we noted a distinct research focus on these issues.
Although researchers analyze the effects of a multitude of determinants, only few variables
(most notably company’s size, visibility, and sector-affiliation) receive sufficient attention
and are associated with consistent results to draw clear conclusions. Research on most
determinants tends to come to inconsistent findings. A closer look at the journals reveals that
these inconsistent findings do not seem to be influenced by different management disciplines
but are spread across different journal segments (i.e., accounting-related journals,
sustainability-related journals, journals from other disciplines, or general management
journals). One can recognize a lack of research on certain determinants such as managerial
attitudes and culture. Furthermore, the quality of sustainability reporting has been largely
neglected. This is not surprising because, other than the extent of reports or the time of
adoption, reporting quality in itself is already difficult to evaluate and thus to study.
Nevertheless, it is important to turn to such more sophisticated issues to allow for meaningful
conclusions, for example, regarding a true and fair view in sustainability reporting. When
looking at the quality of sustainability reporting in connection to another so far scarcely
explored area, namely stakeholder perceptions, research might investigate whether the trend
towards integrated reporting actually satisfies stakeholders’ informational needs and
contributes to their empowerment. This would also imply a shift from the dominance of
content analysis of published documents towards more exploratory and confirmatory
methodological approaches such as interviews, surveys, and experimental studies. Overall, the
above mentioned gaps suggest that there are significant opportunities for future researchers to
contribute to the field of sustainability reporting. This literature review helps to pave the way
for upcoming studies by also discussing potential theoretical anchors (especially legitimacy,
27
stakeholder, signaling, and institutional theory) which are so far often missing or only
rudimentary existing in extant research.
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Figures
Figure 1
Overview and relations of basic concepts and terminology relating to sustainability reporting
43
Sustainability Corporate Social Responsibility

reference and
starting point
Normative
• Triple Bottom Line (Corporate Responsibility, Corporate

• Intra- and Intergenerational Justice Citizenship)
• Inter-linkages among the TBL- and
time-dimensions at equilibrium
(Four-Dimensionality)
measurement
performance
Internal
Accounting related to Sustainability (CSR)
Reporting related to Sustainability (CSR)

in the form of covering
- Integrated reports Three sustainability dimensions holistic

information
disclosure
External
(financial, ecological, and social at
Extent of sustainability
equilibrium)
considerations
- Specialized sustainability, CSR, Two sustainability dimensions
corporate citizenship etc. reports (focus on ecological and social; financial
rather neglected)
- Isolated environmental or social One sustainability dimension
reports (ecological or social) isolated
Focus of
= literature review
Figure 2
Distribution of literature over time and sustainability dimensions
50
45 43
40
35
Other
30 27
25 TBL
25 23
20 DBL
15
15 Environmental
10 11
10 8 7 Social
5 2 2 2 3
44
Figure 3
Distribution according to research methods
50
45
40
35 Experiment
30 Model
25 Survey
20
Interview
15
Document Analysis
10
Conceptual
5
0
45
Figure 4
Types of media analyzed by document analysis 9
50
45
40
35
Others
30
Websites
25
20 Separate Reports
15 Annual Reports
10 Sustainability Reports
5
0
9
A single paper may analyze multiple types of media. Therefore, the numbers might be higher than the number
of empirical papers in each year. Separate reports include social or environmental reports.
46
Table 1
Overview of most frequently examined internal determinants of sustainability reporting 10
DETER- DEPENDENT AUTHORS CONCLUSION

MINANT VARIABLE
Adoption Brammer and Pavelin, 2006 (+)
Gallo and Jones Christensen, 2011 (+)
Haddock, 2005 (+)
Positive influence
Haddock and Fraser, 2008 (+)
widely acknowledged
Kent and Monem, 2008 (+)
Stanny and Ely, 2008 (+)
Nikolaeva and Bicho, 2011 (o)
Extent Amran and Haniffa, 2011 (+)
Clarkson et al., 2008 (+)
Cormier et al., 2004 (+)
Cormier and Magnan, 2003 (+)
Da Silva Monteiro and Aibar-
Corporate Size
Guzmán, 2010 (+)

Fortanier et al., 2011 (+)
Gallo and Jones Christensen, 2011 (+) Positive influence
Gamerschlag et al., 2011 (+) widely acknowledged
Groves et al., 2011 (+)
Haniffa and Cooke, 2005 (+)
Holder-Webb et al., 2009 (+)
Parsa and Kouhy, 2008 (+)
Prado-Lorenzo et al., 2009b (+)
Sotorrío and Sánchez, 2010 (+)
Tagesson et al., 2009 (+)
Papaspyropoulos et al., 2010 (o)
Prado-Lorenzo et al., 2009a (‒)
Quality Brammer and Pavelin, 2006 (+)
Clarkson et al., 2011 (+) Positive influence
García-Sánchez, 2008 (+) acknowledged
Morhardt, J. Emil, 2010 (+)
Vormedal and Ruud, 2009 (o)
10
(+) = positive influence of determinant on dependent variable
(o) = no significant influence
(‒) = negative influence
(mixed) = mixed results on different sub-aspects
47
Adoption Brammer and Pavelin, 2006 (o) No significant

Kent and Monem, 2008 (o) influence found but
Stanny and Ely, 2008 (o) research still scarce
Extent Cormier and Magnan, 2003 (+)
Haniffa and Cooke, 2005 (+)
Tagesson et al., 2009 (+)
Negative correlation
Clarkson et al., 2008 (o)
seems to be unlikely;
Profitability

inconclusive results do
Cormier et al., 2004 (o)
not allow for a more
pointed conclusion
Guzmán, 2010 (o)
García-Sánchez, 2008 (o)
Prado-Lorenzo et al., 2009a (o)
Financial performance
Fortanier et al., 2011 (mixed)

Gamerschlag et al., 2011 (mixed)
Prado-Lorenzo et al., 2009b (‒)
Quality Brammer and Pavelin, 2006 (o)
No significant
influence found but
research still scarce
Adoption Prado-Lorenzo et al., 2009a (+)
Brammer and Pavelin, 2006 (‒) Indifferent results;
Indebtedness, leverage, or gearing
Kent and Monem, 2008 (o) research still scarce

Stanny and Ely, 2008 (o)
Extent Clarkson et al., 2008 (+)
Parsa and Kouhy, 2008 (+)
Cormier and Magnan, 2003 (‒)
Cormier and Magnan, 2004 (‒)
Sotorrío and Sánchez, 2010 (‒) Indifferent results
Cormier et al., 2004 (o)
Haniffa and Cooke, 2005 (o)
Prado-Lorenzo et al., 2009b (o)
Quality Clarkson et al., 2008 (+)
Indifferent results;
Brammer and Pavelin, 2006 (‒)
research still scarce
48
Table 2
Overview of research findings on visibility 11

MINANT VARIABLE
Adoption Haddock and Fraser, 2008 (+)
Husillos-Carqués et al., 2011 (+)
Positive influence
Kent and Monem, 2008 (+)
acknowledged
Nikolaeva and Bicho, 2011 (+)
Brammer and Pavelin, 2006 (o)
Media exposure
Extent Cormier et al., 2004 (+)

Positive influence
Gamerschlag et al., 2011 (+)
widely acknowledged
Quality Brammer and Pavelin, 2006 (o) No significant
Clarkson et al., 2008 (o) influence found but
Clarkson et al., 2011 (o) research still scarce
11
(+) = positive influence of determinant on dependent variable
(‒) = negative influence
49
Table 3
Overview of research findings on sector-affiliation 12

MINANT VARIABLE
Adoption Brammer and Pavelin, 2006 ()
Gallo and Jones Christensen, 2011
()
Rather indifferent
Nikolaeva and Bicho, 2011 ()
results
Haddock, 2005 (o)
Stanny and Ely, 2008 (o)
Mussari and Monfardini, 2010 (c)
Extent Amran and Haniffa, 2011 ()
Clarkson et al., 2008 ()
Cormier and Magnan, 2003 ()
Cormier and Magnan, 2004 ()
Sector-affiliation
Fortanier et al., 2011 ()

Gallo and Jones Christensen, 2011
()
Positive influence
Gamerschlag et al., 2011 ()
widely acknowledged
Holder-Webb et al., 2009 ()
Parsa and Kouhy, 2008 ()
Tagesson et al., 2009 ()
Guzmán, 2010 (o)
Haniffa and Cooke, 2005 (o)
Papaspyropoulos et al., 2010 (o)
Quality Brammer and Pavelin, 2006 ()
Clarkson et al., 2011 () Positive influence
García-Sánchez, 2008 () acknowledged
Morhardt, J. Emil, 2010 ()
Vormedal and Ruud, 2009 (o)
12
() = significant influence of determinant on dependent variable
(c) = conceptual paper
50
Table 4
Overview of research gaps on regulation and governance
General Exemplary research Initial research Remarks and possible

topic questions links anchors
Voluntary vs. Does legal pressure E.g., Brown et al., Institutional theory, e.g.,
mandatory increase comparability 2009b; Chen and normative isomorphism
reporting and/or quality of Bouvain, 2009; through standard-setters,
reporting? Can global Dubbink et al., mimetic isomorphism
standards and soft law 2008; Fortanier et through industry trends,
overcome the drawbacks al., 2011; Hess, coercive isomorphism;
of voluntary disclosure? 2007; Hess, 2008; decoupling theory
Can sustainability Hess and Dunfee, E.g., despite the absence of
reporting better be 2007; Laufer, legitimacy threats or
explained by institutional 2003; Levy et al., stakeholder demands,
pressure than by 2010 sustainability reporting
legitimacy aspects? might be
adopted/improved due to
mimetic/coercive pressures
Governance Is the (non)disclosure of E.g., Brammer and Agency theory; discussion
issues at sustainability information Pavelin, 2006; of benefits and drawbacks
company and influenced by the self- Ertuna and Tukel, of sustainability reporting
country level interest of managers (or 2010; Fonseca, for directors, governance
directors, owners etc.) 2010; Haniffa and entities etc.; absence of
and/or by internal Cooke, 2005; Kent certain governance
governance structures? and Monem, 2008; structures (e.g.,
Prado-Lorenzo et sustainability councils)
al., 2009a might imply sustainability
reporting to be decoupled
from actual operations
Are there differences in Explicit/implicit CSR;
sustainability reporting differences in regulatory
due to differing regimes and/or stakeholder
governance structures governance; potential
and stakeholder regimes, differences in reporting
e.g., in the US (explicit due to differences in
CSR) vs. Europe stakeholder engagement
(implicit CSR)?
Does sustainability Habermas’ theory of
reporting (practice and communicative action;
guidelines) improve accountability theory
stakeholder
accountability and does
stakeholder integration
improve credibility and
accountability?
51
Table 5
Overview of research gaps on reporting quality and stakeholder perception
General Exemplary research Initial research links Remarks and possible

topic questions anchors
Reporting Does the quality of Archel et al., 2008; Resource-based view;
quality sustainability reporting Clarkson et al., 2011; socio-political theories
influence different Criado-Jiménez et al., (stakeholder/legitimacy);
aspects of competitive 2008; Laufer, 2003; voluntary disclosure
advantage? and other studies theory
Does sustainability mentioned in tables 1, Signaling theory;
reporting convey a true 2, and 3 legitimacy theory
and fair view of
corporate sustainability
performance?
Stakeholder Does the reporting of Criado-Jiménez et al., Signaling theory,;
engagement negative aspects 2008; Habisch et al., legitimacy theory;
and influence stakeholder 2011; Hess, 2008; resource-based view;
perception perception? Do Manetti, 2011; Onkila, stakeholder theory
stakeholders perceive 2011; Perrini, 2006;
sustainability reporting Reynolds and Yuthas,
as a proper indicator for a 2008; Thomson and
company’s reliability and Bebbington, 2005
predictability?
Does integrated reporting Information processing
change the uptake of theory; proximity
information by certain compatibility principle
stakeholders (e.g.,
investors)?
Is sustainability reporting Resource dependence
oriented towards the theory; stakeholder
informational needs of theory
certain stakeholders (e.g.,
investors)? Does
stakeholder engagement
influence reporting
patterns (and quality)?
External Does assurance influence Laufer, 2003; Smith et Agency theory;
assurance (perceived) reporting al., 2011; Dando and transaction cost theory;
quality? Swift, 2003; O'Dwyer, signaling theory
Does assurance influence 2011; Wallage, 2000;
information asymmetries Parker, 2005; Simnett
and/or transaction costs? et al., 2009; Chen and
Bouvain, 2009; Kolk
and Perego, 2010;
Hodge et al., 2009;
Pflugrath et al., 2011;
Fonseca, 2010;
52

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This is a non-copy-edited version of the article published by the Journal of Cleaner Production.

doi: 10.1016/j.jclepro.2013.07.005 (http://www.sciencedirect.com/science/article/pii/S0959652613004654)

Determinants of sustainability reporting: A review of results, trends, theory, and

opportunities in an expanding field of research

Prof. Dr. Rüdiger Hahn (Universität Kassel, Germany)

and Michael Kühnen (Universität Kassel, Germany)

This is a non-copy-edited / non-final version of the final article published by the

“Journal of Cleaner Production” (doi: 10.1016/j.jclepro.2013.07.005). Please refer to the

final version published on

Determinants of sustainability reporting: Reviewing results, trends, theory, and

opportunities in an expanding field of research

A diverse set of stakeholders (e.g., employees, customers, suppliers, creditors, advocate

From a historical perspective, the development and focus of sustainability-related reporting

2.1 Basic terminology

INSERT FIGURE 1 ABOUT HERE

Current sustainability-related reporting practice is primarily of voluntary nature so that

2.2 Selecting research questions, databases, and search terms

We selected the Web of Knowledge database because of the extensive coverage of

2.3 Applying practical screening criteria

2.4 Applying methodological screening criteria

According to Brewerton and Millward (2001), a literature review can be methodologically

2.5 Limitations and rigor of the research process

Reliability is achieved if a research method repeatedly (consistently) generates the same

3.1 Distribution over time and sustainability dimensions

Figure 2 illustrates the distribution of publications according to sustainability dimensions. 5

INSERT FIGURE 2 ABOUT HERE

instead of addressing integrated reporting or inter-linkages between all three dimensions of

3.2 Distribution according to research methods

INSERT FIGURE 3 ABOUT HERE

environmental report), it is now the dominant form of sustainability-related reporting.

INSERT FIGURE 4 ABOUT HERE

4. Findings on determinants of sustainability reporting 7

4.1 Internal determinants of sustainability reporting

The following paragraph illustrates findings on internal determinants of sustainability

4.1.1 Corporate size and financial performance

Table 1 gives an overview of the most frequently investigated determinants in terms of

INSERT TABLE 1 ABOUT HERE

4.1.2 Social and environmental performance

4.1.3 Ownership structure

Concentrated ownership—often assumed if an investor owns more than 20% of the

4.2 External determinants of sustainability reporting

Research on the external determinants of sustainability reporting mainly covers aspects of

4.2.1 Corporate visibility

INSERT TABLE 2 ABOUT HERE

Finally, a few sporadic research endeavors investigate branding issues as reporting

4.2.2 Sector affiliation, country-of-origin, and legal requirements

INSERT TABLE 3 ABOUT HERE

4.3 Interim conclusion on determinants of sustainability reporting

5. Discussion of theoretical implications and research gaps

In the following, we provide a link to theory by proposing an outline of a potential theoretical

5.1 Linking results to legitimacy, stakeholder, signaling, and institutional theory

Furthermore, the acceptability of a company in society is directly linked to stakeholder

Signaling theory suggests that in situations of asymmetric distribution of information, one

5.2 Underrepresented streams of research – Possible avenues for future research

5.2.1 Research regarding regulation and governance

As discussed above, the influence of country-of-origin and of different regulatory regimes is

may increase the comparability of sustainability reports by overcoming otherwise existent

INSERT TABLE 4 ABOUT HERE

5.2.2 Research regarding reporting quality and stakeholder perception

Research on stakeholder pressure and legitimacy aspects as determinants of sustainability

influenced either by shareholder or stakeholder traditions. Furthermore, Sinclair-Desgagné

Closely linked to these issues is the question of stakeholder perception of sustainability

INSERT TABLE 5 ABOUT HERE