The impact of audit quality and climate change reporting on corporate performance: a review and future research agenda

Alaamri, Yazen; Hussainey, Khaled; Nandy, Monomita; Lodh, Suman

doi:10.1108/jal-05-2023-0081

JAL

2023

DOI: 10.1108/jal-05-2023-0081

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The impact of audit quality and climate change reporting on corporate performance: a review and future research agenda

Yazen Alaamri,

Khaled Hussainey,

Monomita Nandy

et al.

Abstract: PurposeThe paper aims to review prior literature on the impact of audit quality and climate change reporting on corporate performance. It also aims to offer avenues for future research.Design/methodology/approachBased on the systematic literature review, bibliometric investigation and forest plot, the authors systematized the scientific knowledge from 183 papers.FindingsEarlier studies either focused on audit quality and corporate performance or discussed the link between climate change and corporate performan… Show more

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2024

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Cited by 3 publications

References 80 publications

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The effect of audit committee effectiveness on climate change disclosure commitment: international evidence

Dahmen,

Chouaibi

2024

EMJB

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PurposeClimate change is becoming one of the biggest and most pressing environmental challenges of the last century. As such, the board of directors and its sub-committees need to recognise and address climate change as a potential strategic risk for their companies, using a sustainable approach that prioritises this risk over other business-related risks. In this framework, this paper aims to examine the influence of audit committee characteristics and its effectiveness on the commitment to voluntary climate change disclosure.Design/methodology/approachOur sample covers 403 non-financial companies from 48 countries. These companies belong to the largest greenhouse gas (GHG) emitting sectors, namely oil and gas, chemicals and coal. We have used data from company responses to the Carbon Disclosure Project (CDP) survey for the years 2015–2021. The total number of observations for the seven-year periods is 2,821 firm years. Audit committee characteristics examined are size, independence, gender diversity and number of meetings. Regarding the effectiveness of the audit committee, it is measured using a composite index developed from its individual characteristics.FindingsOur findings show that the number of meetings held by the audit committee affects positively the commitment to the CDP initiative. However, the effects of audit committee size, independence and the presence of women are statistically insignificant. Regarding the effectiveness of the audit committee, our results show that it has a positive and significant effect on the commitment to the CDP initiative. In addition, the results demonstrate that the audit committee diversity, measured using the Herfindahl index, had a positive and significant effect on climate change disclosure commitment.Practical implicationsThis study offers new insights into the role of the audit committee in improving climate change disclosure. The findings indicate that companies can improve their sustainability and social responsibility by establishing an effective audit committee within their board of directors. Furthermore, investors and regulators must give great importance to the characteristics of the audit committee and its roles and duties in the fight against climate change.Originality/valueIn contrast to previous research, this study examines, simultaneously, the impact of individual characteristics and the effectiveness of the audit committee on the commitment to climate change disclosure.

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The effect of audit committee effectiveness on climate change disclosure commitment: international evidence

Dahmen,

Chouaibi

2024

EMJB

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Cultural dynamics and tenure trajectories: how auditor tenure and culture influence key audit matters in the GCC

Al-Asmakh,

Elamer,

Uadiale

2024

JAL

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PurposeThis study examines the impact of audit partner tenure on Key Audit Matters (KAM) disclosures within Gulf Cooperation Council (GCC) countries. It explores how Hofstede’s cultural dimensions influence this relationship, elucidating the effect of cultural context on auditing practices.Design/methodology/approachUtilizing a sample of 456 non-financial firms in the GCC from 2016 to 2021, the study employs regression analyses to explore audit partner tenure's influence on KAM disclosures and the moderating effects of Hofstede's dimensions of power distance, individualism, masculinity and uncertainty avoidance. This affords a detailed examination of individual and cultural impacts on audit quality.FindingsResults reveal a positive relationship between audit partner tenure and KAM disclosures, suggesting that firm-specific knowledge and industry expertise acquired over a long tenure may enhance auditors' ability to identify and report significant matters. Power distance and uncertainty avoidance amplify this effect, whereas individualism diminishes it. Masculinity does not yield significant results.Research limitations/implicationsThis study underscores the need for auditing standards to reflect the complex interplay of auditor tenure and cultural dynamics in the profession's global landscape.Originality/valueThis research contributes to the literature on audit quality by highlighting the formative role of individual auditors and cultural characteristics in KAM disclosure practices. It is among the first to quantitatively analyse the intersection of audit partner tenure and culture in the GCC. It provides valuable insights for regulators, practitioners and policymakers seeking to enhance audit practices across diverse cultural environments.

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Breaking the Boundaries in the Digital Age: Open Banking and Tax Evasion

Dang,

Andreadakis,

Nika

et al. 2024

IJFS

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In this paper, we examine the relationship between open banking and tax evasion. As the open banking literature is still evolving, we try to systematically analyze the literature on conventional banking and tax evasion and then extend the discussion in the context of open banking. The popularity of open baking recently raises a question about its relationship with tax evasion. Digital banking and digital taxation contributed positively to mitigating tax evasion in the context of conventional banking. However, in open banking, the customers can decide to what extent they will share any transaction-related data with their bank, while they can also choose to complete direct transactions with third parties. This creates a new challenge in relation to the mitigation of tax evasion, which is the focus of this paper. Due to lack of granular empirical data, we conduct a systematic literature review and a bibliometric analysis to track the development of the relevant academic debates and identify the arguments that have been presented in relation to this topic. This approach is recognized as well suited for emerging topics in finance research, particularly when data are scarce, as evidenced by studies on COVID-19 and biodiversity. We find that the gaps of the current regulatory framework, at both the national and supranational level, have created challenges and uncertainties at multiple levels. Nonetheless, the findings of the study suggest future research directions and offer valuable guidelines for regulators in utilizing open banking.

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The impact of audit quality and climate change reporting on corporate performance: a review and future research agenda

Cited by 3 publications

References 80 publications

The effect of audit committee effectiveness on climate change disclosure commitment: international evidence

The effect of audit committee effectiveness on climate change disclosure commitment: international evidence

Cultural dynamics and tenure trajectories: how auditor tenure and culture influence key audit matters in the GCC

Breaking the Boundaries in the Digital Age: Open Banking and Tax Evasion

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