How Would Auditors Perceive and Influence Clients' Environmental Activities?


Student thesis: Doctoral Thesis

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Award date14 Apr 2023


Auditors have long been criticized for neglecting the impacts of clients’ environment-related matters. Combining negative media coverage of clients’ environmental incidents with audit-office level online job posting data, I find some counter evidence that audit offices indeed respond to clients’ negative environmental incidents by demanding more green human capital timely. The effect only manifests for environmental incidents happening in lower environmental risk industries, suggesting that auditors exhibit varied sensitivity to environmental risks across industries. My results also imply that client firms that share the same audit office and the same industry as the focal firm proactively increase their environmental disclosures and take more environmental initiatives. Finally, I also document that auditors would charge higher audit fees for their superior environmental knowledge.

    Research areas

  • environmental incidents, auditor, green human capital, environmental disclosure, environmental initiative