The Impact of Environment, Social and Governance (ESG) Rating Differences on Audit Opinions

¹ School of Accounting and Finance, Xiamen University Tan Kah Kee College, Zhangzhou, 363105, China
² School of Finance, Tianjin University of Finance and Economics, Tianjin, 300222, China

^* Corresponding author: bnk22137@stu.xujc.com

Abstract

In recent years, Environment, Social and Governance (ESG) rating has gradually become a new trend in the market investment evaluation. The differences in ESG rating lead to the increase of mom-standard audit opinions issued by auditors, which causes losses to the investment market and enterprises. This issue has attracted much attention, but previous studies on this aspect are relatively lacking. Therefore, this study uses the literature method to summarize recent studies that verify the economic consequences of ESG rating divergence from the perspective of auditor audit delay and information disclosure quality. The research finds that multiple documents prove that ESG rating differences affect audit opinions through two paths which are enterprise information transparency and audit risk perception. Both paths will force auditors to conduct more in-depth investigation and supervision of enterprise, thus reducing the probability of auditors issuing non-standard audit opinions. In addition, this study looks forward to the future development of ESG rating and audit opinions, and three aspects need to be coordinated and reformed, including rating system, audit practice and regulatory policy.