The impact of legitimacy threaton the choice of external carbon assurance Evidence from the US

Purpose The purpose of this study is to examine the impact of legitimacy threats on corporate incentive to obtain external carbon assurance. Design/methodology/approach The sample consists of the largest US companies that disclosed carbon emissions to CDP (formerly the Carbon Disclosure Project) over the period 2010-2013. Based on legitimacy theory, firms are more likely to obtain carbon assurance when they are under greater legitimacy threat. Carbon assurance is measured using CDP data. Three proxies are identified to measure legitimacy threat related to climate change: carbon emissions intensity, firm size and leverage. Findings This paper finds that firms with higher levels of emissions are more likely to obtain independent assurance, and large firms show the same tendency, as they are probably under pressure from their large group of stakeholders. In sum, the findings suggest that firms with higher carbon emissions face greater threats to their legitimacy, and the adoption of carbon assurance can mitigate risks to legitimacy with enhanced credibility of carbon disclosure in stakeholders' decision-making. Originality/value The paper investigates how legitimacy threats affect firms' choice of external carbon assurance in the context of US, which has not been documented previously. It contributes to the understanding of legitimacy theory in the context of voluntary carbon assurance.