||The Association between Negative ESG Issues And Accounting Firms Changes
||Department of Accountancy
This study investigates whether or not reporting of negative ESG (Environmental, Social, and Governance) issues in the extended audit opinions are related to accounting firm changes. Negative ESG issues are considered as a detriment for companies and stakeholders. I assume that when auditors announce a negative ESG issue, their dismissals or withdrawals are likely to occur. I collected the data of sample firms from the Taiwan Stock Exchange and the Taiwan Economic Journal. According to my result, negative governance issues are likely to cause accounting firm change. Nevertheless, negative environmental and social issues are not the main reason for accounting firm change. In addition, I use the same sample firms to examine the change between Big 4 and non-Big4 auditors. The result is consistent with the main test; however, the result of auditor changes from Big 4 to non-Big 4 and non-Big 4 to non-Big 4 are not driven by ESG issues.
I. INTRODUCTION P1
II. LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT P3
2.1 The Concept of ESG P3
2.2 Prior Literature on Auditor Change P4
2.3 Hypothesis Development P5
III. RESEARCH DESIGN P6
3.1 Sample Collection P6
3.2 Auditor Change Model P7
IV. RESULTS P10
4.1 Descriptive Statistics P10
4.2 Logistic Regression Results on Auditor Change P12
V. ADDITIONAL TESTS P13
5.1 The Investigation of The Accounting Firm Changes between Big 4 Firms P14
5.2 The Investigation of The Accounting Firm Changes from Non-Big 4 to Big 4 Firms P15
5.3 The Investigation of The Accounting Firm Changes from Big 4 to Non-Big 4 P16
5.4 The Investigation of The Accounting Firm Changes from Non-Big 4 to Non-Big 4 P16
VI. CONCLUSIONS P17
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