Shared Signing Auditors and Corporate ESG Performance: Hand in Hand or Out of Step?

ABSTRACT As environmental, social, and governance (ESG) considerations become increasingly pivotal to investment decisions, regulatory agendas, and corporate strategies, the diffusion of sustainable practices across firms has emerged as a critical concern. Auditors who serve multiple clients may act as conduits for the cross‐firm transmission of ESG knowledge and norms. Drawing on social network theory and organizational learning theory, this study examines whether sharing signing auditors with high‐ESG peers enhances corporate ESG performance. Using a comprehensive sample of Chinese A‐share listed firms from 2009 to 2025, we document that firms sharing signing auditors with high‐ESG peers exhibit significantly better ESG outcomes, consistent with a “hand‐in‐hand” convergence effect rather than an “out‐of‐step” divergence. This finding remains robust to a series of endogeneity and robustness tests. Moderation analyses show that the positive effect is amplified when executives have environmental backgrounds but attenuated by greater institutional investor attention, underscoring the roles of managerial receptivity and external governance substitution in shaping the diffusion process. Further analyses reveal that the ESG improvements resulting from shared signing auditors translate into enhanced stock returns and stronger sustainable development capacity. This study advances research on ESG determinants and auditor networks by identifying shared signing auditors as interorganizational knowledge brokers that facilitate the diffusion of sustainability‐related knowledge and practices, offering practical implications for firms, audit professionals, and regulators.