preprints.org > business, economics and management > accounting and taxation > doi: 10.20944/preprints202310.1871.v1

Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Version 1 : Received: 30 October 2023 / Approved: 30 October 2023 / Online: 30 October 2023 (10:30:41 CET)

Purpose –This study examines the effect of ESG performance on auditor choice and audit opinion for Egyptian-listed firms. Design/methodology/approach – We use univariate and multivariate analyses of 612 firm-year observations for a sample of 68 firms listed on EGX100 over 2012-2022 using binary logistic regression models. Findings – Consistent with the ethical perspective of corporate social responsibility, we found that firms listed in the ESG index are more likely to assign one of the Big4 auditors, and less likely to receive a qualified opinion. In addition, we find that COVID-19 moderates the relationship between ESG performance, auditor choice, and audit opinion. Originality/value – Our results contribute to the growing interest in the implications of ESG performance for audit practices in emerging economies. Implications: This research has important implications for investors, the audit profession, firms, and regulators in Egypt. It provides substantial evidence that ESG performance can enhance financial reporting quality. Further, it indicates that binding guidelines and regulations are crucial to oversee corporate ESG performance, especially during crisis time to enhance investors’ protection and firms’ sustainability.

ESG performance; auditor choice; audit opinion; Egypt

Business, Economics and Management, Accounting and Taxation

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