Environmental information disclosure and audit costs
Abstract
Enterprises, as major consumers of environmental resources and major producers of environmental pollution, should pay attention to the fulfillment of their environmental responsibilities while pursuing economic interests. The auditor needs to provide reasonable assurance that the financial statements of the audited entity are free from the risk of material misstatement, and the audit procedures performed and the audit risk assumed to adjust the audit fee. It remains to be explored whether auditors take the level of environmental information disclosure of audited units into account when pricing audit services. This paper combed and analyzed the relevant literature, took A-share listed companies as the research object, and selected 2013–2022 as the sample period to test the relationship between environmental information disclosure and audit fees and the moderating effect of media attention. The empirical results show that firms’ level of environmental disclosure significantly increases audit fees, that media attention reinforces this positive effect, and that the results remain robust to tests such as lagged one-period treatment. Further analysis also reveals that the positive relationship between the level of environmental information disclosure and audit fees is more significant among state-owned enterprises and non-heavily polluting enterprises, and before the implementation of the new Environmental Protection Law. This paper enriches the research on the influence factors of audit fees and makes some contributions to improve the environmental information disclosure system and the audit fee model.
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Copyright (c) 2025 Ze Dong, Zhuofan Shi, Xuanming Zhang
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