Can climate-related risks increase audit fees?–Evidence from China

Xin Yang, Luohan Wei, Rantian Deng, Jie Cao and Chuangxia Huang

Finance Research Letters, 2023, vol. 57, issue C

Abstract: In this study, we investigate whether the audit fees would be affected by the firms’ climate-related risks. Using physical climate risks and transition climate risks indicators, we find that climate-related risks can significantly raise audit fees, and this finding still robustness on instrumental variables, replacing audit fees measure, and firm fixed effects model. Furthermore, potential mechanism demonstrates that climate-related risks increase audit fees by the media attention. Finally, the further analysis reveals that the energy firms, state-owned firms and large firms with climate-related risks have a more significant impact on audit fees than non-energy firms, non-state-owned firms and small firms.

Keywords: Physical climate risks; Transition climate risks; Audit fees; Text analysis (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005664

DOI: 10.1016/j.frl.2023.104194

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