Oleh Pasko Li Zhang Alvina Oriekhova Vardan Aleksanyan Mykola Hordiyenko Yarmila Tkal


Purpose. This paper investigates the effect of cross-reporting quality transfer: the association between the merits of the financial auditor and the quality of corporate social responsibility (CSR) reporting. Specifically, we examine whether the effect of Big Four financial audits on the CSR reporting quality of Chinese listed firms differs from that of non-Big Four firms.
Design/methodology/approach. This paper uses archival data and regression analysis from a sample (5257 firm-year observations) of A-share listed firms on the Shanghai and Shenzhen Stock Exchanges from 2009 to 2018.
Findings. The analysis shows that when a company’s financial auditor is a Big Four firm, the quality of CSR reports is higher than when it is audited by non-Big Four auditor, which in turn can be explained by differences in cross-reporting quality transfer between Big Four and non-Big Four firms. Moreover, this effect is more pronounced in non-state-owned enterprises (NSOEs) than in state-owned enterprises (SOEs), and among firms residing in high-pressure legal environments as opposed to low-pressure regions.
Originality. This study extends the literature on the quality of CSR reporting based on the type of financial reporting audit provider, thus bridging the gap between financial audit and sustainability reporting practice and elucidating the cross-reporting quality transfer effect.
Practical implications. The paper’s findings shed light on the impact that Big Four firms have on the quality of CSR reports through financial audits, thus confirming the cross-reporting quality transfer effect in China. These findings might appeal to political decision-makers, authorities and companies given the notable contribution of CSR disclosure to the decision‐making processes of stakeholders.