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Can climate-related risks increase audit fees?–Evidence from China

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  • Yang, Xin
  • Wei, Luohan
  • Deng, Rantian
  • Cao, Jie
  • Huang, Chuangxia

Abstract

In this study, we investigate whether the audit fees would be affected by the firms’ climate-related risks. Using physical climate risks and transition climate risks indicators, we find that climate-related risks can significantly raise audit fees, and this finding still robustness on instrumental variables, replacing audit fees measure, and firm fixed effects model. Furthermore, potential mechanism demonstrates that climate-related risks increase audit fees by the media attention. Finally, the further analysis reveals that the energy firms, state-owned firms and large firms with climate-related risks have a more significant impact on audit fees than non-energy firms, non-state-owned firms and small firms.

Suggested Citation

  • Yang, Xin & Wei, Luohan & Deng, Rantian & Cao, Jie & Huang, Chuangxia, 2023. "Can climate-related risks increase audit fees?–Evidence from China," Finance Research Letters, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005664
    DOI: 10.1016/j.frl.2023.104194
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    2. Liu, Peng & Chen, Yaru & Mu, Yan, 2024. "The impact of climate risk aversion on agribusiness share price volatility," Finance Research Letters, Elsevier, vol. 61(C).

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