Does ESG rating disagreement affect audit opinions?

Cheng Zhang, Qianyao Zha, Xun Sun and Liping Chen

International Review of Economics & Finance, 2024, vol. 96, issue PA

Abstract: This paper examines the impact of ESG rating disagreement on audit opinions. We find that ESG rating disagreement significantly increases the probability of auditors issuing modified audit opinions, operational risk and risk of material misstatement play intermediary roles between ESG rating disagreement and audit opinions. Heterogeneity analysis shows that the effect of ESG rating disagreement on audit opinions is more significant among companies with lower institutional investors shareholding ratios, weaker internal control, and private nature. Our research expands the study of economic consequences of ESG rating disagreement and provides policy inspiration for regulators to standardize ESG rating.

Keywords: ESG rating disagreement; Audit opinion; Operational risk; Risk of material misstatement (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:96:y:2024:i:pa:s1059056024006518

DOI: 10.1016/j.iref.2024.103659

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