This paper examines the effect of environmental policy stringency (EPS) on audit pricing. By exploiting the exogenous variation in environmental policies across 26 countries, we find that firms in countries with more stringent environmental policies incur lower audit fees. The inverse association is more pronounced in common law countries, in countries with a higher level of public enforcement of regulations and in countries with more investor protection. The lower audit fees are also more prominent for firms that are followed by more analysts and firms that have a greater institutional ownership. Furthermore, we find that firms in countries with strong regulations are better and more innovative at managing environmental risk, which implies that better environmental performance of the firms following stronger regulations could lower business risks and thus decrease audit fees. Overall, our findings suggest that compliant firms benefit from EPS.

中文翻译：

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环境政策和审计定价

本文研究了环境政策严格性（EPS）对审计定价的影响。通过利用 26 个国家环境政策的外生差异，我们发现环境政策更严格的国家的公司需要支付较低的审计费用。这种反向关联在普通法国家、公共执法水平较高的国家以及投资者保护较多的国家更为明显。对于有更多分析师跟随的公司和拥有更多机构所有权的公司来说，较低的审计费用也更为突出。此外，我们发现，监管严格的国家的公司在管理环境风险方面表现得更好、更具创新性，这意味着遵循更严格监管的公司的更好的环境绩效可以降低商业风险，从而减少审计费用。总体而言，我们的研究结果表明，合规公司受益于每股收益。