This study empirically analyzes how corporate sustainability activities—measured by ESG ratings and
sustainability report publication—affect audit quality. While prior studies have primarily focused on
the relationship between ESG (or CSR) and firm value or financial performance, relatively little
attention has been paid to how different forms of ESG information influence audit quality. In
particular, few studies distinguish between ESG ratings and sustainability report publication despite
their different informational characteristics. Thus, we examine the distinct impacts of ESG ratings
and report issuance on audit quality.
Research Methods: Using 2,461 KOSPI-listed firm-year observations (2019–2024), we perform
multiple and logistic regression analyses. Audit fees, audit hours, and Big 4 auditor selection serve
as proxies for audit quality. Propensity Score Matching (PSM) is also utilized to ensure the
robustness of our findings.
Results in Research: ESG ratings and sustainability report publication are positively associated with
audit fees, audit hours, and Big 4 auditor selection. The sustainability report results remain robust
after PSM.
Research Conclusion: Unlike prior studies treating ESG as a single construct, this study distinguishes
ESG ratings from sustainability report publication and demonstrates that each has a significant yet
distinct association with audit quality.
This study empirically analyzes how corporate sustainability activities—measured by ESG ratings and
sustainability report publication—affect audit quality. While prior studies have primarily focused on
the relationship between ESG (or CSR) and firm value or financial performance, relatively little
attention has been paid to how different forms of ESG information influence audit quality. In
particular, few studies distinguish between ESG ratings and sustainability report publication despite
their different informational characteristics. Thus, we examine the distinct impacts of ESG ratings
and report issuance on audit quality.
Research Methods: Using 2,461 KOSPI-listed firm-year observations (2019–2024), we perform
multiple and logistic regression analyses. Audit fees, audit hours, and Big 4 auditor selection serve
as proxies for audit quality. Propensity Score Matching (PSM) is also utilized to ensure the
robustness of our findings.
Results in Research: ESG ratings and sustainability report publication are positively associated with
audit fees, audit hours, and Big 4 auditor selection. The sustainability report results remain robust
after PSM.
Research Conclusion: Unlike prior studies treating ESG as a single construct, this study distinguishes
ESG ratings from sustainability report publication and demonstrates that each has a significant yet
distinct association with audit quality.