The (mis)alignment of financial reporting and non-financial reporting integrity

• Authors: Perica Ivana , Vuko Tina , Šodan Slavko

Title variants

PL

Zgodność czy brak zgodności sprawozdawczości finansowej i integralności sprawozdawczości niefinansowej

• Languages of publication: EN

Abstracts

EN

Purpose: By linking verified non-compliance of financial outcomes disclosures with nonverified disclosures of information related to social and environmental outcomes, we can assess their relationship and gain insight into the potential incentives driving Environmental, Social and Governance (ESG) disclosures. The aim of this study is to assess the credibility of non-financial reporting by examining whether companies that demonstrate greater compliance with ESG disclosure requirements also place more emphasis on "true and fair" or "fair" financial reporting. Methodology/approach: The study analyzed a sample of listed companies for the period from 2019 to 2022, using a logistic regression with a modified audit opinion as the outcome variable and the ESG score as the primary explanatory variable. Findings: The results show a negative relationship between ESG disclosure scores and modified audit opinions, suggesting that companies with lower ESG disclosure scores are more likely to receive a modified audit opinion. Companies with higher ESG scores are less likely to receive a modified audit opinion than other companies. In addition to ESG scores, a modified audit opinion is also significantly related to the Big Four, profitability and solvency. Research limitations/implications: Our research sample is limited to the Croatian capital market with a relatively small number of observations, and the ESG score measurement is based on the methodology of the Croatian Financial Services Supervisory Authority, which is applicable to the Croatian environment. The generalization of our results should, therefore, be taken with caution. Originality/value: Given the relatively high frequency of modified audit opinions in our institutional setting, we are able to estimate the association between ESG performance and modified audit opinion more accurately than in alternative settings where modified audit opinions related to non-compliance with accounting standards are rather rare. In addition, this study contributes to the existing literature by examining how ESG disclosure compliance is related to the audit opinion in an environment where firms do not face potentially severe financial consequences of a modified audit opinion.

Cel: Łącząc zweryfikowane niezgodności ujawnień wyników finansowych z niezweryfikowanymi ujawnieniami informacji związanych z wynikami społecznymi i środowiskowymi, możemy ocenić ich związek i uzyskać wgląd w potencjalne zachęty napędzające ujawnienia ESG. Celem artykułu jest ocena wiarygodności sprawozdawczości niefinansowej poprzez zbadanie, czy firmy, które w większym stopniu przestrzegają wymogów dotyczących ujawniania ESG, kładą większy nacisk na „prawdziwą i uczciwą” lub „uczciwą” sprawozdawczość finansową. Metodyka/podejście badawcze: W badaniu przeanalizowano próbę notowanych spółek w okresie od 2019 do 2022 roku, stosując regresję logistyczną ze zmodyfikowaną opinią jako zmienną wynikową i wynikiem ESG jako głównym predyktorem zainteresowania. Wyniki: Wyniki pokazują negatywny związek między ujawnieniami ESG a zmodyfikowanymi opiniami audytorskimi, co sugeruje, że firmy z niższymi wynikami ujawnień ESG częściej otrzymują zmodyfikowaną opinię audytorską. Firmy z wyższymi wynikami ESG rzadziej otrzymują zmodyfikowaną opinię audytorską niż inne firmy. Oprócz wyników ESG zmodyfikowana opinia audytorska jest również istotnie związana z wielką czwórką, rentownością i wypłacalnością. Ograniczenia/implikacje badawcze: Próba badawcza jest ograniczona do chorwackiego rynku kapitałowego z relatywnie niewielką liczbą obserwacji, a pomiar wyników ESG opiera się na metodyce Chorwackiego Urzędu Nadzoru Usług Finansowych, która ma zastosowanie w środowisku chorwackim. Dlatego należy zachować ostrożność przy uogólnianiu naszych wyników. Oryginalność/wartość: Biorąc pod uwagę stosunkowo wysoką częstotliwość modyfikowanych opinii audytorskich w naszym otoczeniu instytucjonalnym, jesteśmy w stanie oszacować związek między wynikami ESG a zmodyfikowaną opinią audytorską dokładniej niż w alternatywnych warunkach, w których zmodyfikowane opinie związane z niezgodnością ze standardami rachunkowości są raczej rzadkie. Ponadto artykuł stanowi wkład w istniejącą literaturę przedmiotu, ponieważ zawiera analizę, w jaki sposób zgodność z ujawnieniami ESG jest powiązana z opinią audytorską w środowisku, w którym firmy nie ponoszą potencjalnie poważnych konsekwencji finansowych wydania przez biegłego rewidenta zmodyfikowanej opinii.

Keywords

EN

non-financial reporting; financial reporting; audit opinions; ESG disclosures; financial reporting quality; modified audit opinion

PL

sprawozdawczość niefinansowa; sprawozdawczość finansowa; opinie audytorskie; ujawnienia ESG; jakość sprawozdawczości finansowej; zmodyfikowana opinia audytora

• Publisher: Stowarzyszenie Księgowych w Polsce
• Journal: Zeszyty Teoretyczne Rachunkowości
• Year: 2025
• Issue: 49(2)
• Pages: 161-179

Contributors

author

Perica Ivana

• University of Split, Faculty of Economics, Business and Tourism, Department of Accounting and Auditing

author

Vuko Tina

• Faculty of Economics, Business and Tourism, Department of Accounting and Auditing

author

Šodan Slavko

• University of Split, Faculty of Economics, Business and Tourism, Department of Accounting and Auditing

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