Who really cares? Climate change exposure and auditor conservatism: Evidence from China

Chao Yang and Di Song

Finance Research Letters, 2024, vol. 70, issue C

Abstract: This study examines the association between climate change exposure and auditor conservatism, indicating that firms with high climate change exposure demonstrate a higher level of auditor conservatism. The mechanism analysis reveals that climate change exposure reinforces auditor conservatism partly through the combined effects of earnings management and investor sentiment. Multiple robustness checks confirm the validity of main results. Given the growing interest in climate change and its associated risks in both practice and research, as well as the expected increasing significance of these risks, our findings are timely to a broad audience, including investors, regulators, auditors, managers, and scholars.

Keywords: Climate change exposure; Auditor conservatism; Earnings management; Investor sentiment; China (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013618

DOI: 10.1016/j.frl.2024.106332

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