The effect of environmental credit rating on audit fees: A quasi-natural experiment from China
Environmental credit rating (ECR) is a new policy that deeply integrates the construction of ecological civilisation and the social credit system in China; however, there is a paucity of research on the response of external auditors to the ECR. This study takes the environmental credit evaluation po...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2024-02-01
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| Series: | Heliyon |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2405844024027014 |
| _version_ | 1797267603737018368 |
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| author | Jianghan Wang Haiyan Zhong Minxin Li |
| author_facet | Jianghan Wang Haiyan Zhong Minxin Li |
| author_sort | Jianghan Wang |
| collection | DOAJ |
| description | Environmental credit rating (ECR) is a new policy that deeply integrates the construction of ecological civilisation and the social credit system in China; however, there is a paucity of research on the response of external auditors to the ECR. This study takes the environmental credit evaluation policy implementation as a quasi-natural experiment, using China's A-share listed companies in heavily polluting industries from 2008 to 2019 as samples. We construct a heterogeneous timing difference-in-differences model to empirically explore the impact of ECR on audit fees. The results show that the ECR significantly reduces companies' audit fees. Importantly, our analysis suggests that the ECR improves environmental information transparency and enhances sustainable operation ability, thereby reducing audit fees. Further analysis shows that the negative correlation between the ECR and audit fees is more obvious in non-state enterprises, in poor legal environments and low levels of trust. Our study provides scientific evidence for the economic consequences of the environmental credit evaluation policy and enriches the literature on the factors affecting audit fees. It has revelatory significance for China and other developing countries to implement and improve the environmental credit evaluation policies and better guide enterprises to fulfil their environmental responsibilities. |
| first_indexed | 2024-03-07T22:54:16Z |
| format | Article |
| id | doaj.art-615ab1479d564dca916c4f75634858c5 |
| institution | Directory Open Access Journal |
| issn | 2405-8440 |
| language | English |
| last_indexed | 2024-04-25T01:19:13Z |
| publishDate | 2024-02-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Heliyon |
| spelling | doaj.art-615ab1479d564dca916c4f75634858c52024-03-09T09:28:50ZengElsevierHeliyon2405-84402024-02-01104e26670The effect of environmental credit rating on audit fees: A quasi-natural experiment from ChinaJianghan Wang0Haiyan Zhong1Minxin Li2School of Economics and Management, China Three Gorges University, Yichang, 443002, ChinaSchool of Economics and Management, China Three Gorges University, Yichang, 443002, China; Corresponding author.School of Business, Jiaxing University, Jiaxing, 314001, ChinaEnvironmental credit rating (ECR) is a new policy that deeply integrates the construction of ecological civilisation and the social credit system in China; however, there is a paucity of research on the response of external auditors to the ECR. This study takes the environmental credit evaluation policy implementation as a quasi-natural experiment, using China's A-share listed companies in heavily polluting industries from 2008 to 2019 as samples. We construct a heterogeneous timing difference-in-differences model to empirically explore the impact of ECR on audit fees. The results show that the ECR significantly reduces companies' audit fees. Importantly, our analysis suggests that the ECR improves environmental information transparency and enhances sustainable operation ability, thereby reducing audit fees. Further analysis shows that the negative correlation between the ECR and audit fees is more obvious in non-state enterprises, in poor legal environments and low levels of trust. Our study provides scientific evidence for the economic consequences of the environmental credit evaluation policy and enriches the literature on the factors affecting audit fees. It has revelatory significance for China and other developing countries to implement and improve the environmental credit evaluation policies and better guide enterprises to fulfil their environmental responsibilities.http://www.sciencedirect.com/science/article/pii/S2405844024027014Environmental credit ratingAudit feesEnvironmental information transparencySustainable operation abilityQuasi-natural experiment |
| spellingShingle | Jianghan Wang Haiyan Zhong Minxin Li The effect of environmental credit rating on audit fees: A quasi-natural experiment from China Heliyon Environmental credit rating Audit fees Environmental information transparency Sustainable operation ability Quasi-natural experiment |
| title | The effect of environmental credit rating on audit fees: A quasi-natural experiment from China |
| title_full | The effect of environmental credit rating on audit fees: A quasi-natural experiment from China |
| title_fullStr | The effect of environmental credit rating on audit fees: A quasi-natural experiment from China |
| title_full_unstemmed | The effect of environmental credit rating on audit fees: A quasi-natural experiment from China |
| title_short | The effect of environmental credit rating on audit fees: A quasi-natural experiment from China |
| title_sort | effect of environmental credit rating on audit fees a quasi natural experiment from china |
| topic | Environmental credit rating Audit fees Environmental information transparency Sustainable operation ability Quasi-natural experiment |
| url | http://www.sciencedirect.com/science/article/pii/S2405844024027014 |
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