Managerial Auditing Journal最新文献

{"title":"The impact of key audit matter reporting on analyst forecast accuracy and forecast dispersion: evidence from Chinese listed firms","authors":"Zhiying Hu, Yan Li, Beixin Lin, G. Kleinman","doi":"10.1108/maj-08-2021-3291","DOIUrl":"https://doi.org/10.1108/maj-08-2021-3291","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to investigate the decision usefulness of key audit matters (KAMs) disclosures from the perspective of financial analysts.\u0000\u0000\u0000Design/methodology/approach\u0000Using data from two groups of Chinese-listed firms subject to different audit standards, the authors use a quasi-natural experiment and the difference-in-differences approach to examine the impact of KAMs on analyst forecasts. The authors also conduct a textual analysis on management disclosures as well as on the content of KAM disclosures.\u0000\u0000\u0000Findings\u0000The results of this study show that both forecast errors and dispersion have significantly declined for the firms disclosing KAMs compared to the firms without such disclosures. Further analysis presents evidence that KAM disclosures have resulted in simultaneous increase in management disclosures and audit quality. In addition, auditor characteristics, such as auditor’s dependence on client fees and its industry specialization, and firm’s characteristics, such as its ownership structure and its social connection with the auditor, appear to affect the informativeness of KAM disclosures. The authors also perform content analysis of KAMs to provide additional insight.\u0000\u0000\u0000Research limitations/implications\u0000As AH firms are required to adopt the expanded audit report one year before A shares firms, by design, there is only one year in which these two types of companies differ. Therefore, the results without overgeneralizing the impact of KAM disclosures should be interpreted. In addition, this study involves the Chinese market alone and, therefore, may be affected by factors peculiar to the functioning of the Chinese economy and financial markets.\u0000\u0000\u0000Originality/value\u0000The main contribution of this study lies in highlighting the salience of KAM context in shaping the relationship between auditors, managers and analysts and its collective impact on information environment. The findings of this study are significant in that they help establish the importance of KAM disclosures in helping to assure that higher quality financial information is available to capital markets, as well as information that is otherwise unavailable given disclosure mandates in China. This study adds to the literature on the importance of providing additional means of safeguarding auditor independence and on the value of auditor expertise in providing useful content in audit disclosures. Moreover, the findings suggest that the expanded audit report can help reduce the level of asymmetric information, especially for state-owned entities. They provide insight on how the new audit rule influences managers and auditors communicating complex accounting matters as well as the moderating effect of the social connections between auditors and firm executives.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42957868","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Audit quality and independence concerns after major audit reforms within a developing country: stakeholder perceptions from Vietnam","authors":"Lan Anh Nguyen, Michael Kend, H. Luong","doi":"10.1108/maj-03-2022-3475","DOIUrl":"https://doi.org/10.1108/maj-03-2022-3475","url":null,"abstract":"\u0000Purpose\u0000The purpose of this exploratory study is to investigate the perceptions of key stakeholders in Vietnam on the impact on audit quality and independence after major reforms to audit.\u0000\u0000\u0000Design/methodology/approach\u0000Using new institutional sociology, this study seeks to explain how Vietnamese external auditors and accountants have responded to audit reforms and provides perceptions on how audit quality and independence may have been impacted. This study draws on semi-structured interviews conducted with 33 highly experienced participants, representing various stakeholder groups in Vietnam.\u0000\u0000\u0000Findings\u0000The findings indicate that after almost a decade since the full implementation of the Law of Independent Audit (2011) in Vietnam, the audit and assurance market in Vietnam is characterised by low quality audits, a lack of compliance with standards and auditor independence concerns, specifically amongst the smaller audit practitioners. Participants indicated that competition for new audit clients or retaining existing clients is a priority over improving audit quality and independence.\u0000\u0000\u0000Originality/value\u0000By examining a combination of different factors relating to audit quality and independence, the authors further demonstrate the impact of these factors in Vietnam, helping audit professionals and regulators to have a better and more meaningful understanding of that state of the audit profession. This study also considers audit concerns or issues arising because of the COVID-19 pandemic in Vietnam.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43008264","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The effect of the rules- versus principles-based accounting standards on opinion shopping","authors":"H. Chung, Yewon Kim","doi":"10.1108/maj-12-2020-2964","DOIUrl":"https://doi.org/10.1108/maj-12-2020-2964","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine whether the change in accounting standards from the rules-based local GAAP to the principles-based IFRS influences a manager’s opportunistic auditor choice for a favorable audit opinion, opinion shopping (OS) behavior. The authors view that IFRS adopters exploit the flexibility of IFRS to their advantage and search for auditors that are more likely to give clean opinions. However, auditors may refuse to yield to client pressure for OS, because of the greater potential audit risk under principles-based standards.\u0000\u0000\u0000Design/methodology/approach\u0000This study applies a difference-in-differences methodology by using Korean listed firms (i.e. IFRS adopters) as a treatment sample and Korean unlisted firms that do not voluntarily adopt IFRS (i.e. K-GAAP users) as the control sample. OS behavior is measured by the methodology of Lennox (2000).\u0000\u0000\u0000Findings\u0000The results of this study show that the OS behavior of IFRS adopters increases after IFRS adoption compared to that of K-GAAP users. This phenomenon is more prevalent when they are audited by non-Big 4 auditors or when they are economically important to auditors. These suggest that the principles-based IFRS without specific rules increase the scope of OS, and auditors tend to accept OS clients by weighing up its costs and benefits.\u0000\u0000\u0000Originality/value\u0000This study contributes to the literature on OS by presenting that the approach of accounting standards can be an important influencing factor on a firm’s successful engagement in OS. This finding also provides policy implications for many economies by suggesting mechanisms that can be developed to reduce clients’ opportunistic auditor choices under principles-based accounting standards.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44414752","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Do adjustments bring auditors peace of mind? The effect of previous audit adjustments on current-year audit pricing","authors":"Songsheng Chen, M. Magnan, Zhi-liang Tian, L. Yao","doi":"10.1108/maj-02-2022-3461","DOIUrl":"https://doi.org/10.1108/maj-02-2022-3461","url":null,"abstract":"\u0000Purpose\u0000This paper aims to investigate the effect of prior years’ audit adjustments, a proxy for auditors’ private information regarding the persistence of their clients’ audit risk, on audit pricing in the current year.\u0000\u0000\u0000Design/methodology/approach\u0000The authors use unique data sets of audit adjustments and audit fieldwork days from China, and a regression approach, to test their hypothesis.\u0000\u0000\u0000Findings\u0000The authors find that larger previous audit adjustments are associated with higher current-year audit fees, which is partially attributed to increased audit effort. The authors further document that the results are more pronounced when audit adjustments are consistently made in the same direction or more recent; in these cases, a larger percentage of the total effect is also attributable to the risk premium, instead of audit effort. Finally, the authors find that the effect of previous audit adjustments on current-year audit fees is stronger for firms with younger chief executive officers and specialist auditors.\u0000\u0000\u0000Originality/value\u0000To the authors’ best knowledge, they are the first to test the implication of auditors’ private information in setting audit fees. In addition to demonstrating that audit fees consist of a risk premium and a component to cover related costs, the authors further show variations in the relative importance between costs and risk premium under various contexts.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49074075","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Do socially responsible audit firms provide higher audit quality? An investigation of corporate social responsibility activity in audit firms","authors":"Hanwen Chen, Siyi Liu, Xin Liu, Jiani Wang","doi":"10.1108/maj-10-2021-3348","DOIUrl":"https://doi.org/10.1108/maj-10-2021-3348","url":null,"abstract":"\u0000Purpose\u0000The paper aims to examine the corporate social responsibility (CSR) activity of audit firms.\u0000\u0000\u0000Design/methodology/approach\u0000Using hand-collected data on all Chinese audit firms’ CSR activities from 2007 to 2020, this study constructs two measures to proxy for audit firms’ CSR engagement: a dummy variable to indicate whether an auditor engages in CSR activities in year t and the frequency with which auditors conduct CSR activities in year t. The authors use ordinary least squares regression as a baseline methodology, along with the entropy balancing method and instrumental variable approach to alleviate potential endogeneity concerns.\u0000\u0000\u0000Findings\u0000The baseline results show that socially responsible audit firms provide higher quality audit services than their counterparts. In particular, the authors find that clients audited by socially responsible audit firms are less likely to receive an aggressively clean opinion. Moreover, the findings suggest that CSR activities related to community and employees are more relevant in improving audit quality compared with those related to other dimensions of CSR. Further analyses show that capital markets and audit clients react positively to audit-firm CSR activity. Audit firms engaging in CSR increase their audit inputs in response to risky clients, as compared with their counterparts. Finally, cross-sectional analyses show that the positive relationship is more pronounced for non-Big 4 and non-industry experts and is attenuated by within-firm geographic dispersion. In terms of client characteristics, the positive effect of audit-firm CSR is stronger when their clients face the higher financial risk or have lower CSR awareness than others. Taken together, these findings are consistent with the ethical view of audit-firm CSR engagement.\u0000\u0000\u0000Practical implications\u0000The study advances investors’ understanding of audit-firm CSR engagement and helps them evaluate the credibility of audited financial reports. Besides, the findings may also help guide the audit firms to conduct more CSR activities and help guide the audit clients to choose CSR audit firms.\u0000\u0000\u0000Originality/value\u0000To the best of the authors’ knowledge, this study provides the first large-sample evidence by empirically examining the association between audit-firm CSR activity and audit service performance. Besides, this paper also explores audit-firm CSR activity from two competing perspectives, thereby providing a comprehensive understanding of this issue. Finally, this work responds to the call for more CSR research in emerging markets.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45867283","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Partner cross-contagion in audit offices and client reporting quality","authors":"John Goodwin, P. Kent, R. Kent, J. Routledge","doi":"10.1108/maj-11-2021-3375","DOIUrl":"https://doi.org/10.1108/maj-11-2021-3375","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine if partner cross-contagion in audit offices is associated with client reporting quality. To this end, the authors test if the presence in an audit office of a partner with a highly aggressive style is associated with the reporting quality of other partners’ clients. Partners with a highly aggressive style are identified by their tendency to approve favorable client reporting. The authors add to the existing literature that provides limited and equivocal evidence on audit office cross-contagion.\u0000\u0000\u0000Design/methodology/approach\u0000Partner style is determined in an estimation period from 2010 to 2014. Aggressive style is identified when partners tend to approve favorable client reporting, which is shown by a positive value for their clients’ median discretionary accruals. Partners are considered to exhibit a highly aggressive style if they have positive median client discretionary accruals within the 90th percentile. Cross-contagion analysis is then conducted in a test period from 2015 to 2019 by determining if the presence in an office of a partner with a highly aggressive style is associated with the reporting quality of other partners’ clients. Two measures of client reporting quality used. These are the accuracy of current-period accruals in predicting period-ahead cash flows and earnings management related to benchmark beating.\u0000\u0000\u0000Findings\u0000This study finds partner cross-contagion of highly aggressive style in Big 4 offices that is associated with lower client reporting quality for non-Metals and Mining industry clients. This cross-contagion only occurs when the contagious partner has a very high level of aggressive style. This study finds Big 4 partners are susceptible to aggressive style cross-contagion regardless of their own idiosyncratic style. The results of this study show more cross-contagion in small Big 4 offices and mitigation of cross-contagion for economically important clients. Cross-contagion in non-Big 4 offices is observed for Metals and Mining industry clients.\u0000\u0000\u0000Originality/value\u0000By determining style from partners’ past clients’ discretionary accruals, this study extends prior cross-contagion research that relies on restatements to identify style. This study examines several other cross-contagion issues not addressed in prior studies. These include differences in cross-contagion for Big 4 and non-Big 4 offices and for large and small Big 4 offices, partners’ susceptibility to cross-contagion and the influence of client importance.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42450959","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Audit fees, audit report lag and abnormal tone: evidence from China","authors":"Zhong-lu Teng, Jin Han","doi":"10.1108/maj-04-2021-3086","DOIUrl":"https://doi.org/10.1108/maj-04-2021-3086","url":null,"abstract":"\u0000Purpose\u0000This study aims to provide evidence on the association between abnormal tone and audit fees, as well as between abnormal tone and audit report lag.\u0000\u0000\u0000Design/methodology/approach\u0000This study uses a fixed-effects model to examine the relationship between abnormal positive tone and audit engagement (audit fees and audit report lag). Following Blanco et al., the authors used propensity score matching to examine the robustness of the findings.\u0000\u0000\u0000Findings\u0000Abnormal positive tone affects the audit process. An abnormal positive tone in annual reports is associated with greater audit effort and higher audit fees.\u0000\u0000\u0000Originality/value\u0000This study contributes to the determinants of audit fees and audit lag by analyzing the impact of an abnormal positive tone on audit engagement. The literature analyzing the determinants of audit engagement often focuses on the quality of non-textual information. This study analyzes the impact of the quality of textual information (measured by abnormal tone) on audit engagement, which provides evidence of the association between textual disclosure and audit.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42006373","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Audit team equality and audit quality threatening behaviour","authors":"Alice Annelin","doi":"10.1108/maj-08-2021-3288","DOIUrl":"https://doi.org/10.1108/maj-08-2021-3288","url":null,"abstract":"\u0000Purpose\u0000This paper aims to examine the association between audit quality threatening behaviour (AQTB) and three team equality dimensions: deindividuation, social identity and gender equality. Discrimination among auditors has been experienced in accounting firms across the world, which can lead to behaviour that risks the quality of work. The negative influence of this behaviour can have consequences for clients, audit firms, regulators and the wider society due to the threat on audit quality.\u0000\u0000\u0000Design/methodology/approach\u0000A questionnaire was conducted at a Big 4 audit firm in Sweden. Members of audit teams that worked together on one specific engagement were asked to give their perceptions of their experience of equality and behaviours within the team. Hypotheses were tested using ordered logistic regression and partial least squares structural equation model.\u0000\u0000\u0000Findings\u0000Audit teams that experience deindividuation conduct more AQTBs and audit teams with higher social identity conduct less AQTBs. However, the audit team’s social identity can moderate the audit teams’ experience with deindividuation and reduce AQTB.\u0000\u0000\u0000Originality/value\u0000With a unique data set of practising audit teams, this study is the first to investigate how audit team equality is related to AQTB. Contributions are made to practitioners about audit team dynamics since the AQTB occurs as part of the audit decision-making process that influences audit quality. Inequality also has recruitment and reputation consequences. Thus, contributions are made to the audit market that is interested in audit quality. The study also contributes empirical evidence from an audit team context about behavioural outcomes and the social identity and deindividuation model theory (Klein et al., 2007; Reicher et al., 1995).\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47091819","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Religion and disclosure of non-GAAP earnings","authors":"Wei Jiang, Pureum Kim, Myungsoo Son","doi":"10.1108/maj-04-2022-3524","DOIUrl":"https://doi.org/10.1108/maj-04-2022-3524","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine whether non-generally accepted accounting principles (GAAP) earnings disclosed by firms headquartered in high religious areas (religious firms) are more informative. The non-GAAP disclosure is voluntary and not subject to external audits, and it is difficult to verify the accuracy ex post, which provides management with incentives to strategically use non-GAAP reporting. This study examines religiosity as a potential governance mechanism that reduces management opportunism.\u0000\u0000\u0000Design/methodology/approach\u0000Using a comprehensive sample from 2010 to 2018, the authors conduct univariate analyses and regression tests. Religiosity is measured by the number of religious adherents in the Metropolitan Statistical Areas of a firm’s headquarter location.\u0000\u0000\u0000Findings\u0000This study finds that religious firms disclose non-GAAP earnings more frequently compared to non-religious firms. This study further documents that religiosity is negatively associated with aggressive non-GAAP reporting. It also finds that items excluded by religious firms in calculating non-GAAP earnings are less associated with future performance, suggesting that these excluded items are transient and, thus, of higher quality. Finally, the market returns on unexpected non-GAAP earnings (i.e. earnings response coefficients) are greater for religious firms. Overall, the results of this study show that non-GAAP reporting by religious firms is more likely to be informative rather than opportunistic.\u0000\u0000\u0000Research limitations/implications\u0000Despite the authors’ best endeavors, this study does not fully address the issue of endogeneity, and therefore, the results of this study must be interpreted as strong association rather than causation.\u0000\u0000\u0000Practical implications\u0000Religious social norms (regional level) can complement a firm’s corporate governance and ethical codes (firm level) by attenuating undesirable, opportunistic management practices. These findings should be informative to investors who assess the quality non-GAAP disclosures. The findings of this study are also relevant to regulators [e.g. the Securities and Exchange Commission (SEC)] when they allocate limited resources. The SEC may use less resources for monitoring firms headquartered in religious areas and apply the saved resources on monitoring riskier firms.\u0000\u0000\u0000Originality/value\u0000To the best of the authors’ knowledge, this is the first study to show that religiosity may act as a potential monitoring mechanism that attenuates aggressive non-GAAP earnings and enhances the informativeness of non-GAAP. The findings of this study suggest that religious social norms (regional level) can complement a firm’s corporate governance and ethical codes (firm level) by restricting undesirable, opportunistic management practices.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44308476","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"COVID-19 pandemic resilience: an analysis of firm valuation and disclosure of sustainability practices of listed firms","authors":"Soon‐Yeow Phang, Christofer Adrian, Mukesh Garg, Anh Viet Pham, Cameron Truong","doi":"10.1108/maj-06-2021-3183","DOIUrl":"https://doi.org/10.1108/maj-06-2021-3183","url":null,"abstract":"\u0000Purpose\u0000This paper aims to investigate the effect of firms’ sustainability practices on firm performance and valuation during the COVID-19 pandemic.\u0000\u0000\u0000Design/methodology/approach\u0000Using a sample of Australian listed firms from 2011 to 2021, the authors perform textual analysis on sustainability practices from annual reports and sustainability report disclosures and include this variable in various regression models that assess firm valuation. The authors also use propensity score matching and Heckman two-stage regression methodology to address endogeneity concerns.\u0000\u0000\u0000Findings\u0000The authors find that firms disclosing sustainability practices exhibit higher market valuations relative to other firms. Specifically, loss-making firms exhibit higher market valuation during the COVID-19 crisis relative to prior period. The authors also observe a negative association between sustainability practices and firm performance proxied by return on assets. The findings suggest that engagement in sustainable practices helps loss-making firms remain resilient during the pandemic. In addition, the authors find that the positive relation between sustainability practices and firm value is stronger among firms with a higher level of annual report readability.\u0000\u0000\u0000Originality/value\u0000Considering the conflicting evidence in the literature on the economic benefits of sustainability practices, this study takes advantage of the heterogeneity in corporate practices and provides empirical evidence that a firm’s sustainability practices can build economic resilience during the COVID-19 pandemic crisis. The authors believe the findings of the study is timely in informing the regulators and standard-setters on changes in reporting required to increase sustainability in the business practices.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46673134","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}