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The role of audit quality in waste management behavior

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  • Saeed, Asif
  • Zafar, Muhammad Wasif
  • Manita, Riadh
  • Zahid, Noor

Abstract

The entire world is facing the issue of climate change. Due to rapid industrialization, enormous waste generation is aggravating the situation. In this study, we investigate the role of audit quality in promoting sustainable waste management in firms. Using a sample of 8100 firm-year observations for the period 2002–2017 from 34 countries, we provide novel empirical evidence that good audit quality significantly reduces total corporate waste production. Further, our results are robust to alternate proxies of audit quality, and waste management, and only appear with unqualified audit reports. To alleviate the endogeneity issue, we use two different identification strategies; namely, PSM and GMM. Altogether, these findings demonstrate that Big4 auditing firms ensure the credibility and reliability of the non-financial disclosures of their auditees as apparent by their rigorous auditing processes. Moreover, the main implication of our study is that firms are subject to a decrease in their overall waste production when their external assurer is one of the BIG4 auditing firms.

Suggested Citation

  • Saeed, Asif & Zafar, Muhammad Wasif & Manita, Riadh & Zahid, Noor, 2024. "The role of audit quality in waste management behavior," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1203-1216.
    • Handle: RePEc:eee:reveco:v:89:y:2024:i:pa:p:1203-1216
    DOI: 10.1016/j.iref.2023.08.019
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