Enhancing the Credibility of Sustainability Disclosure and Assurance: A Behavioral–Probabilistic Framework and Institutional Market Evidence from an Emerging Economy

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🔬研究者:Extends behavioral auditing and ESG reporting literature with a probabilistic framework and empirical evidence from an emerging economy.

🏢実務担当者:Provides insights on how to enhance sustainability assurance credibility to potentially lower cost of capital and improve market access.

🏛政策担当者:Highlights the role of governance and institutional factors in strengthening assurance effectiveness, informing regulatory design.

Purpose and Design: This study develops and empirically validates a behavioral probabilistic framework to explain how the credibility of sustainability disclosure and assurance affects financial outcomes in banking and capital market institutions. By modeling non-linear cognitive uncertainty and institutional moderation mechanisms, the study provides a behavioral account of why assurance credibility varies across regulatory and market environments. The research integrates theoretical development with comparative empirical evidence from an emerging economy context. Method and Approach: A mixed method design is employed, combining Structural Equation Modeling (SEM), instrumental variable estimation and probabilistic simulation techniques. The empirical analysis draws on sustainability reports and external assurance statements issued by banks and listed firms over the period 2020–2024. Behavioral constructs capturing cognitive uncertainty, bias and ethical framing are incorporated to assess how decision related interference influences assurance credibility and its financial consequences. Full transparency of measurement instruments, correlation matrices and econometric diagnostics is provided to ensure replicability and independent evaluation. Findings: Results indicate that higher quality sustainability disclosure significantly enhances assurance credibility, which in turn reduces firms’ cost of capital and improves market liquidity. Cognitive uncertainty weakens the disclosure assurance relationship, while governance intensity and banking integration strengthen the financial impact of credible assurance. Originality/Value: The study reconceptualizes sustainability assurance as a behavioral probabilistic process shaped by cognitive and institutional factors rather than a purely deterministic verification mechanism, thereby extending the behavioral foundations of auditing and ESG reporting in emerging markets. Theoretical, Practical and Social Implications: The framework advances research at the intersection of sustainability assurance, behavioral auditing and institutional finance. It offers regulators and practitioners structured guidance for strengthening assurance credibility and supports improved transparency, reduced information asymmetry and more sustainable financial decision-making.

• semanticscholar https://researchlakejournals.com/index.php/IJBFIT/article/download/678/502first seen 2026-07-05 05:35:34