Research On The Impact Of ESG Rating On Audit Opinions

With the development of economic society,sustainable development concept has become the global mutual recognition.ESG(Environmental,Social and Governance)embodies the sustainable development concept of integrating environmental protection,social benefits and corporate governance.It is an important evaluation system to measure enterprises’ sustainable development capacity,and has received special concerns from various circles of society.Since the issuance of the Governance Standards for Listed Companies in 2002,the regulatory authorities have successively issued a series of policy documents such as the Administrative Measures for the Legal Disclosure of Enterprise Environmental Information and the Standards for the Legal Disclosure of Enterprise Environmental Information(2021),forming the ESG system which is compatible with the characteristics of China’s economic development.ESG is an important grasp on the realization of the "double carbon" goal and the high-quality development transformation of enterprises’ economy,and has become the important basis for investment decision-making and risk management in the capital market.In addition to investors,audit institutions,as an important intermediary organization in the capital market,are also important users of enterprise ESG information.Modern risk-oriented audit needs to use a large number of analysis procedures to identify and evaluate audit risks,and the evaluation of ESG is likely to become an important source and reference for analysis procedures.Therefore,under the background of China’s ecological civilization construction and high-quality economic development transformation,it is of great significance to study the impact of corporate ESG performance on auditors’ behavioral decision-making.In the academic field,ESG rating is regarded as a comprehensive indicator to evaluate the ESG performance of enterprises,which makes it more feasible to investigate the motivation and economic consequences of enterprise ESG performance.The existing literature believes that good ESG performance can effectively improve the efficiency of enterprise resource allocation and business performance.The high ESG rating indicates that the enterprise has good sustainable development ability and long-term capital value,which has important reference value for auditors’ audit opinion decision-making.However,there are few studies to discuss this at present.In view of this,we take A-share listed companies from 2010 to 2020 as the research object to investigate the impact of ESG ratings of listed companies on audit opinions.The results show that:(1)the higher the ESG rating of a company,the lower the probability of being issued a modified audit opinion.After using PSM and instrumental variable methods to alleviate endogenous problems,the conclusion remains valid.(2)Mechanism test shows that ESG rating can reduce the probability of being issued a modified audit opinion by influencing information generation behavior(improving enterprise operation and management)and information disclosure behavior(reducing information asymmetry).(3)The heterogeneity analysis shows that the positive impact of ESG rating on audit opinions is more obvious when the intensity of local institutional regulation is stronger,or the enterprise is non-state-owned,non-polluting,or with a more effective internal control.(4)The sub-item test shows that the performance of environmental protection and corporate governance dimensions can effectively reduce the probability of receiving modified audit opinions,but the performance of social responsibility has limited impact on audit opinions.The research conclusions enrich the literature on ESG economic consequences and the influencing factors of audit opinions,and provide feasible suggestions for regulators and listed companies to improve the corporate management level and the information environment of the capital market,and decision-making basis for auditors to control audit risks and improve audit work efficiency.