The Role of Independent Assurance Providers in Legitimizing Companies’ Environmental, Social and Governance Risks

Senny Harindahyani () and Bambang Tjahjadi
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Senny Harindahyani: University of Surabaya
Bambang Tjahjadi: Universitas Airlangga

A chapter in Proceedings of the 20th International Symposium on Management (INSYMA 2023), 2024, pp 86-92 from Springer

Abstract: Abstract This study aims to examine the impact of environmental, social and governance (ESG) risks in selecting independent auditors based on legitimacy theory. This study expects that companies with lower ESG risk levels will increase user trust by hiring reputable independent auditors to increase the reliability and credibility of their reports. This study conducted empirical testing using the logit model. The data used were obtained from the OSIRIS database, the company’s website and the CSRHub database, especially for the ESG risk rating. The results prove that companies with low ESG risk levels will legitimize their reporting by involving reputable auditors (Big-4) to audit their financial reporting.

Keywords: ESG Risk; Big-4; Legitimacy Theory (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-244-6_16

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DOI: 10.2991/978-94-6463-244-6_16

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