ESG initiatives and going concern risk assessment: the moderating role of auditor gender

Purpose – The purpose of this study is to examine whether environmental, social, and governance (ESG) initiatives affect the going concern (GC) risk assessment by auditor and whether auditor gender moderates such relation. Design/methodology/approach – Based on a sample of 600 firms from the European Union (EU) covering the period from 2016 to 2024, this study uses a logistic regression model to test the association between ESG initiatives and the GC risk assessment, as well as the moderating role of auditor gender. Findings – Findings show that ESG initiatives are negatively associated with the likelihood of issuing a going concern opinion (GCO), especially when the signing auditor is female. This is consistent with the notion that ESG initiatives alleviate the auditor’s GC risk assessment regarding the firm’s ability to maintain business continuity in the foreseeable future. Furthermore, empirical evidence also supports the view that female signing auditors are less likely to issue a GCO for firms developing ESG initiatives. Research limitations/implications – This study is based on a sample restricted to non-financial firms within the EU area, to the extent that results cannot be extensively generalized beyond other contexts. Practical implications – This study sheds light on the conditions under which firms are less likely to receive a GCO by thereby providing interesting insights for practitioners interested in evaluating the key determinants of GC risk assessment. Originality/value – While prior research has extensively examined the consequences deriving from the implementation of ESG initiatives, the effects on audit outcomes still remain underexplored. This study addresses this gap by focusing on GC risk assessment. Furthermore, it also contributes to increasing the understanding of how gender-based differences among signing auditors affect audit opinion.