HEC Research Papers Series,
HEC Paris

Abstract: We examine whether the joint provision of corporate social responsibility (CSR) assurance services and financial audit by the same audit firm influences auditors’ assessment of going concern risk. We predict that the provision of CSR assurance and financial audit by the same audit firm creates CSR-related knowledge spillovers from the CSR assurance team to the financial audit engagement team, which help in the auditor’s assessment of going concern risk. Using more than 28,000 firm-year observations from 55 countries, we document that, relative to audit firms that provide only the financial audit, audit firms that provide both CSR assurance and financial audit for the same client (1) issue more frequent going concern opinions and have lower Type-II going concern errors, (2) have clients that book larger environmental and litigation provisions, (3) report earnings that are more persistent and value relevant and are less likely to book income-decreasing earnings restatements, and (4) do not charge higher audit fees or total fees. Our results are important especially because of firms’ increasing exposure to CSR risks and the growing number of countries that require assurance of CSR reports.

Keywords: CSR Assurance; CSR Risks; Going Concern Opinion; Knowledge Spillover; Non-Audit Services

JEL-codes: M40

73 pages, August 20, 2019

Full text files

papers.cfm?abstract_id=3438435 HTML file Full text

Download statistics

• HEC Paris
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Antoine Haldemann ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ebg:heccah:1347This page generated on 2024-09-13 22:19:53.