Auditor selection and corporate social responsibility

作者：Sun Wen Chi; Huang Hua Wei; Dao Mai; Young Chaur Shiuh

来源：Journal of Business Finance & Accounting, 2017, 44(9-10): 1241-1275.

DOI：10.1111/jbfa.12260

• controversial industries
• corporate social responsibility
• industry-specialized auditors

This study examines the association between the selection of an industry-specialist auditor and corporate social responsibility (CSR). We find that firms with higher CSR ratings are more likely to hire industry-specialist auditors (national-level industry leaders, city-level industry leaders or joint city-national industry leaders). Moreover, firms with better CSR performance related to product quality and the environment in controversial industries are found to select non-specialized auditors. The results suggest that such firms may overinvest in CSR activities associated with the environment and product issues to disguise the sin nature of their manufactured goods, and simultaneously engage low quality auditors perhaps to avoid full disclosure of potential environmental and legal liabilities. Overall, we conclude that CSR is associated with the non-controversial firms ensuring high quality financial reporting in response to societal expectations, and thus CSR firms in such industries have strong incentives to engage industry-specialist auditors.

• 出版日期2017-11
• 单位中国人民银行金融研究所