Title: THE IMPACT OF ESG DISCLOSURE ON AUDIT QUALITY IN NATURAL RESOURCES AND ENERGY COMPANIES FROM COUNTRIES AROUND THE WORLD
Authors:
Thi Ngoc Ngo, Diem Quynh Vu, Dinh Thanh Tung Tran and Thi My Hanh Phan
Abstract:
This study examines the impact of ESG disclosure on audit quality in firms operating in the natural resources and energy sectors across countries worldwide. Using panel data of listed firms over the period 2014-2024, the study employs several estimation techniques, including Ordinary Least Squares (OLS), the Fixed Effects Model (FEM), and the Random Effects Model (REM). After conducting model selection tests, the Fixed Effects Model (FEM) is identified as the most appropriate specification. The empirical findings indicate that the level of ESG disclosure has a statistically significant effect on audit fees, reflecting changes in the scope and intensity of auditors’ monitoring for firms with higher levels of non-financial transparency. Furthermore, organizational complexity (measured by the number of subsidiaries) plays a moderating role in the relationship between ESG disclosure and audit fees. Control variables include financial leverage (LEV), firm size (SIZE), and GDP growth. The findings contribute to the growing body of empirical literature on the role of non-financial information in market monitoring mechanisms and provide managerial implications for firms, audit practitioners, and regulators in the context of advancing global sustainable development.
Keywords: ESG disclosure; Audit quality; Audit fees; Natural resources and energy; Organizational complexity.
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