Effects of carbon emissions on audit fees

IF 2.8 3区 管理学 Q2 BUSINESS, FINANCE Managerial Auditing Journal Pub Date : 2023-09-13 DOI:10.1108/maj-10-2022-3734
Jianhua Tan, Kam C. Chan, Samuel Chang, Bin Wang
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Abstract

Purpose This paper aims to examine the effect of carbon emissions on audit fees. The authors hypothesize that firms in cities with higher carbon emission levels have lower reporting transparency, higher return volatility or are subject to higher reputation risk, causing them to be charged higher audit fees for auditing services. Design/methodology/approach The authors use panel data of 25,960 firm-year observations from a sample of Chinese firms. The carbon emission data for each Chinese city are obtained from the China Emission Accounts and Datasets for Emerging Economies. This paper adopts a multiple regression model to study the impact of carbon emissions on audit fees. Findings The authors find that firms located in cities with higher carbon emission levels and firms with more carbon emissions are charged, on average, a higher audit fee. This audit fee effect of carbon risk is transmitted by lessened information transparency and elevated financial risk within these firms. This paper shows that auditors consider carbon risk in their audit fee decisions and other factors that could influence audit risk and effort. Originality/value This study draws a connection between carbon emissions and audit fees. It is especially relevant due to the increasing importance of environmental factors in the audit risk assessment. In addition, the findings suggest that a firm implementing a proactive environmental strategy benefits the economy and decreases the costs to the firm for services such as auditing.
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碳排放对审计费用的影响
目的研究碳排放对审计收费的影响。作者假设,在碳排放水平较高的城市,公司的报告透明度较低,回报波动性较高,或者面临更高的声誉风险,从而导致它们对审计服务收取更高的审计费用。设计/方法/方法作者使用了来自中国公司样本的25,960个公司年度观察的面板数据。中国各城市的碳排放数据来源于《中国新兴经济体碳排放核算与数据集》。本文采用多元回归模型研究碳排放对审计收费的影响。研究发现,位于碳排放水平较高的城市和碳排放水平较高的城市的会计师事务所平均收取较高的审计费用。碳风险的审计费用效应通过这些公司内部信息透明度的降低和财务风险的增加来传递。本文表明,审计师在审计费用决策中考虑了碳风险以及其他可能影响审计风险和审计工作的因素。独创性/价值本研究提出了碳排放与审计费用之间的联系。由于环境因素在审计风险评估中的重要性日益增加,这一点尤为重要。此外,研究结果表明,实施积极主动的环境战略的公司有利于经济发展,并降低了公司审计等服务的成本。
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来源期刊
CiteScore
5.40
自引率
13.80%
发文量
45
期刊介绍: The key areas addressed are: ■Audit and Assurance (financial and non-financial) ■Financial and Managerial Reporting ■Governance, controls, risks and ethics ■Organizational issues including firm cultures, performance and development In addition, the evaluation of changes occurring in the auditing profession, as well as the broader fields of accounting and assurance, are also explored. Debates concerning organizational performance and professional competence are also covered.
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