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Firm-Level Climate Risk and Big 4 Audit Firms: A Cross-Country Study / MD HAQUE

Swansea University Author: MD HAQUE

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Abstract

This research examines the role of Big4 Auditors in mitigating climate risk. Primarily, this research is motivated by the lack of studies on the role of Big Four auditors on climate risk. This study, then, employs the firm-level climate risk based on the analyst calls. Subsequently, this research em...

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Published: Swansea, Wales, UK 2023
Institution: Swansea University
Degree level: Master of Research
Degree name: MSc by Research
Supervisor: Hoque, Hafiz
URI: https://cronfa.swan.ac.uk/Record/cronfa68084
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Abstract: This research examines the role of Big4 Auditors in mitigating climate risk. Primarily, this research is motivated by the lack of studies on the role of Big Four auditors on climate risk. This study, then, employs the firm-level climate risk based on the analyst calls. Subsequently, this research employs various statistical methodologies to examine the relationship between Big 4 auditors and climate risk and found that Big 4 auditors are negatively related to firm-level climate risk. This correlation remains stable across various climate-related variables and is supported by multiple statistical approaches, such as fixed effects. To address the selection issue, furthermore, this research employs the Heckman selection model and finds that the inverse mills ratio is significantly related to climate risk. This research also uses a propensity score model to address the endogeneity problem, and our results still hold. Our empirical finding in this study, therefore, may significantly contribute to the literature in understanding the substantial influence of Big Four Auditors’ practice on climate change risk at the firm level.
Item Description: ORCiD identifier: https://orcid.org/0009-0009-5508-1438
Keywords: Firm-level climate risk, Big 4 Auditors, Heckman selection model, PSM
College: Faculty of Humanities and Social Sciences