Does audit firm tenure enhance firm value? Closing the expectation gap through corporate social responsibility

IF 2.8 3区 管理学 Q2 BUSINESS, FINANCE
L. Brooks
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引用次数: 1

Abstract

Purpose This study aims to examine the moderating effect of audit firm tenure on the association between corporate social responsibility (CSR) and firm value. Prior studies provide mixed results on this association, which may be due to differing theoretical expectations related to CSR and firm value. It is also possible that external stakeholders are unable to differentiate between positive and negative CSR investments, as CSR reports are generally not assured by independent third parties. Thus, the authors propose that audit firm tenure may be used by external stakeholders to evaluate CSR performance. Design/methodology/approach The authors use an ordinary least squares regression to examine the moderating effect of audit firm tenure on the relation between CSR and firm value after controlling for other determinants of firm value and various internal and external governance mechanisms documented in the literature. The sample consists of 15,707 firm-year observations from US firms during the sample period of 2000 to 2012. The authors measure CSR quality using rating scores from MSCI ESG STATS (formerly the KLD database), audit firm tenure as the number of years the incumbent auditor has served the client and firm value using Tobin’s Q. Findings The results indicate that CSR is positively associated with firm value when audit firm tenure is long but not when tenure is short. The results are robust to alternative measures of firm value, CSR performance scores, and individual CSR dimensions. The evidence supports the argument against mandatory audit firm rotation in the USA. Research limitations/implications Future studies could examine a similar issue in alternative settings and/or look at cross-sectional variations among firms on the association between CSR and firm value by other auditor traits such as auditor industry specialization and big-name reputation. Additionally, as auditor alone is unable to ensure the quality of management disclosures and their accountability, future studies could examine the moderating effect of internal and other external governance mechanisms on the association between CSR and firm value, exploring when the signaling effect of auditor tenure on CSR reporting quality and its effect on firm value is most salient. Practical implications The findings are important to regulators and investors. The authors provide evidence that longer audit tenure serves as a signaling device for external investors with regard to the quality of a firm’s CSR performance. Hence, the study facilitates regulators’ cost-benefit analysis related to mandating audit firm rotation. The evidence suggests that mandating a term limit on auditor tenure may have the unintended consequence of eliminating a signaling effect of auditor tenure on the quality of CSR disclosures under information asymmetry. This supports the Public Company Oversight Board’s decision to forgo the requirement of mandatory audit firm rotation in the USA. Originality/value Prior literature presents mixed findings on the association between CSR performance and firm value based on a variety of underlying theories (economic, stakeholder and contingency theory). Literature on mandatory auditor rotation has concentrated on the auditor tenure effect on perceived and actual audit quality as reflected in earnings quality. Relying on agency theory, this study posits that auditor tenure serves as a signal for the quality of CSR activities in the absence of CSR assurance reporting as CSR quality can be difficult to evaluate. The authors provide evidence that audit tenure moderates the association between CSR activities and firm value and longer audit tenure makes it more likely that the CSR activities are associated with increased firm value.
审计公司任期是否能提高公司价值?通过企业社会责任缩小期望差距
目的本研究旨在检验审计事务所任期对企业社会责任(CSR)与企业价值之间关系的调节作用。先前的研究对这种关联提供了喜忧参半的结果,这可能是由于与企业社会责任和企业价值相关的理论预期不同。外部利益相关者也可能无法区分积极和消极的企业社会责任投资,因为独立的第三方通常无法保证企业社会责任报告。因此,作者提出外部利益相关者可以利用审计事务所任期来评估企业社会责任绩效。设计/方法/方法在控制了企业价值的其他决定因素和文献中记载的各种内部和外部治理机制后,作者使用普通最小二乘回归来检验审计事务所任期对企业社会责任与企业价值之间关系的调节作用。样本包括2000年至2012年样本期间美国公司的15707个公司年度观察结果。作者使用MSCI ESG STATS(前身为KLD数据库)的评级分数、现任审计师为客户服务的年数即审计公司任期以及使用Tobin的Q.Findings的公司价值来衡量企业社会责任质量。结果表明,当审计公司任期长时,企业社会责任与公司价值呈正相关,而当任期短时则不相关。该结果对企业价值、企业社会责任绩效得分和个人企业社会责任维度的替代衡量标准是稳健的。证据支持了反对美国强制审计公司轮换的论点。研究局限性/含义未来的研究可以在替代环境中研究类似的问题,和/或通过其他审计师特征(如审计师行业专业化和知名度)来观察企业社会责任与公司价值之间的横向差异。此外,由于审计师本身无法确保管理层披露的质量及其问责制,未来的研究可以考察内部和其他外部治理机制对企业社会责任与公司价值之间关系的调节作用,探索审计师任期对企业社会责报告质量的信号效应及其对公司价值的影响何时最为显著。实际含义这些发现对监管机构和投资者都很重要。作者提供的证据表明,较长的审计任期是外部投资者了解企业社会责任绩效质量的一个信号装置。因此,该研究有助于监管机构对强制审计公司轮换进行成本效益分析。证据表明,在信息不对称的情况下,强制规定审计师任期可能会产生意想不到的后果,消除审计师任期对企业社会责任披露质量的信号效应。这支持了上市公司监督委员会放弃美国强制性审计公司轮换要求的决定。原始性/价值先前的文献基于各种基本理论(经济、利益相关者和偶然性理论),对企业社会责任绩效与公司价值之间的关联提出了喜忧参半的结论。关于强制性审计师轮换的文献集中于审计师任期对感知和实际审计质量的影响,反映在盈余质量中。基于代理理论,本研究认为,在没有企业社会责任保证报告的情况下,审计师任期是企业社会责任活动质量的一个信号,因为企业社会责任质量可能很难评估。作者提供的证据表明,审计任期调节了企业社会责任活动与企业价值之间的联系,而更长的审计任期使企业社会责任行为更有可能与企业价值的增加有关。
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来源期刊
CiteScore
5.40
自引率
13.80%
发文量
45
期刊介绍: The key areas addressed are: ■Audit and Assurance (financial and non-financial) ■Financial and Managerial Reporting ■Governance, controls, risks and ethics ■Organizational issues including firm cultures, performance and development In addition, the evaluation of changes occurring in the auditing profession, as well as the broader fields of accounting and assurance, are also explored. Debates concerning organizational performance and professional competence are also covered.
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