The Impact of ESG Performance on Audit Fees in STI Firms

In the context of mounting global environmental, social, and governance (ESG) regulations, compounded by China’s ambitious “dual carbon” target aimed at curbing emissions within the new energy sector (as outlined in the EU Corporate Sustainability Reporting Directive (CSRD)), ESG performance has emerged as a pivotal aspect of corporate sustainability and risk management strategies. The present study takes STAR Market Science and Technology Innovation Enterprises (STI Firms) listed in the A- share segment as the research object. It empirically examines the impact of ESG performance on audit fees based on 2023 data, supplemented by a robustness analysis of 2023 industry-wide data. The study’s findings indicate a significant and negative correlation between ESG performance and audit fees, suggesting that improving ESG performance can lead to a reduction in audit fees. This study offers direct evidence of the economic consequences of ESG practices in the context of the new energy industry. It also provides new perspectives on the factors affecting audit fees and the economic consequences of ESG performance. Furthermore, it provides empirical support for auditing practice and policy making.