Greenhouse gas emissions and audit fees in the transportation and logistic sector

This study aims to investigate the impact of greenhouse gas (GHG) emissions on audit fees. The moderating effect of board gender diversity on that relationship is also investigated. Using a sample of EU non-financial companies between 2012 and 2023, the study employs winsorization for data normalization and implements various regression techniques to achieve a thorough evaluation. The authors find that firms in the transportation sector with higher GHG emissions are charged higher fees they are charged for auditing services. This paper shows that auditors consider climate change-related risks in their audit fee decisions that could influence audit risk and effort. Findings also reveal that the presence of female directors on the board moderates the association between GHG emissions and audit fees. The findings reveal significant implications for firm management, regulators, investors, and auditors. This study provides empirical evidence that climate change, as an external risk factor, has a measurable impact on audit fees.