Environmental Responsibility, Social Responsibility, and Governance from the Perspective of Auditors

Jaehong Lee; Suyon Kim; Eunsoo Kim

doi:10.3390/ijerph191912181

Environmental Responsibility, Social Responsibility, and Governance from the Perspective of Auditors

Int J Environ Res Public Health. 2022 Sep 26;19(19):12181. doi: 10.3390/ijerph191912181.

Authors

Jaehong Lee¹, Suyon Kim², Eunsoo Kim³

Affiliations

¹ Major in Accounting/Taxation, Division of Business Administration, Kyonggi University, Suwon 16227, Korea.
² YSB Center for Global ESG and Business Ethics, Yonsei-ro 50, Seoul 03722, Korea.
³ Department of Global Business Administration, Sangmyung University, Seoul 03016, Korea.

Abstract

This study examined the relationship between ESGs and the audit hours of 3010 Korean stock-listed firms from 2014 to 2019. The Korean Corporate Governance Service assigns ratings to each firm based on ESG performance. We discover that auditors exert more effort auditing companies that prioritize ESGs. Additionally, we evaluated whether the CEO's competency level influences the relationship between ESGs and the total amount of time spent auditing the company. We observed that auditors spend less time auditing companies with highly competent CEOs. We disaggregated the total number of audit hours by rank and verified each audit hour completed by partners, CPAs, as well as staff. Based on our research, we conclude that a firm's ESG increases audit complexity, and increases the amount of effort exerted in the auditing process.

Keywords: ESG performance; audit effort; audit hours; audit hours by rank; managers’ ability.

MeSH terms

Humans
Organizations*
Social Behavior
Social Responsibility*

Grants and funding

This research received no external funding.