This study adopts an agency theory perspective to examine the association between Employee Share Ownership (ESO) and the use of Non-Audit Services (NAS) in large French listed firms. Our goal is to provide a nuanced understanding of ESO as an incentive-alignment mechanism in contexts with concentrated ownership. The findings reveal that higher levels of ESO are positively associated with the use of NAS. Additional tests show that the component of NAS explained by ESO is associated with higher future profitability, while abnormally high levels of NAS are associated with decreased future firm performance. These results challenge conventional concerns over NAS impairing auditor independence. Instead, they suggest that NAS incurs a bonding cost that strengthens stakeholder alignment in the presence of ESO. This conclusion is supported by a test showing that a negative association between audit committee expertise and NAS is mitigated in the presence of higher levels of ESO. This study highlights the dual role of ESO in lowering monitoring costs and increasing bonding costs. It also offers practical implications, suggesting that policymakers should support ESO initiatives and corporate executives should implement ESO as a complementary corporate governance tool. The findings expand the understanding of ESO beyond traditional contexts and open avenues for future research on governance dynamics in civil law settings.
This study investigates the nuanced relationship between corporate social responsibility (CSR) performance and tax avoidance (TA), emphasizing how the country-level institutional factors of progressiveness and governance moderate this association. We use a large panel of 9031 firm-year observations from 27 European countries (2016–2022) and employ a multidimensional measure of TA. Our analysis finds a consistent negative association between CSR and TA, thereby supporting the transparent behavior hypothesis. However, this relationship is shaped by national context. In more progressive countries, CSR more effectively constrains visible TA practices but may fail to deter complex, opaque strategies, which may indicate partial decoupling. Paradoxically, in high-governance environments the role of CSR weakens, suggesting that sophisticated legal frameworks may inadvertently enable firms to use CSR symbolically while engaging in strategic tax planning. This study contributes to the CSR–TA literature by employing a multidimensional approach to assess TA that captures both visible and opaque tax behaviors. It integrates the institutional moderators of country progressiveness and governance, and leverages the European context to reveal how national conditions shape the alignment between CSR and corporate tax behavior. It highlights the importance of an ethical culture, institutional nuance, and regulatory context in fostering authentic CSR practices.
This study examines the relationship between managerial tone and audit outcomes. We employ 42,250 firm-year observations from United States non-financial firms from 2000 through 2020. Our results show that firms with a more positive managerial tone in their 10-K filings tend to experience more favorable audit outcomes. This is evidenced by fewer financial restatements, fewer adverse opinions on the strength of internal controls, lower audit fees, less audit effort, and fewer going concern opinions. We also find that such favorable impacts are more pronounced in financially non-distressed firms, thereby reinforcing the credibility of the positive managerial tone as perceived by auditors. Our main findings are robust across various sensitivity tests and alternative variable approaches. Our analysis also suggests that the relationship between managerial tone and audit outcomes is more pronounced for firms with a poorer quality information environment and weaker governance monitoring. Finally, our findings suggest that a positive managerial tone is negatively associated with both earnings management and the likelihood of whistleblowing, which in turn have a positive influence on audit outcomes. Overall, our study contributes to the literature and practice by demonstrating the significant role that client-firm managerial tone plays in audit outcomes.
This study examines the impact of board gender diversity on carbon emissions performance, focusing on Scope 3 emissions, and assesses how cultural environments moderate this relationship. Using a robust econometric approach, we analyze data over a 15 year period from 336 multinational companies listed among the top 500 firms in the 2020 Forbes Global 2000. The findings reveal that board gender diversity significantly enhances carbon emissions performance by reducing Scope 3 emissions, with the effect being more pronounced in jurisdictions with higher levels of board diversity. The study also indicates that a higher critical mass of female directors is necessary for substantial reductions in Scope 3 emissions, compared to Scope 1 and 2 emissions. Additionally, the study's findings show that cultural factors play a pivotal role in the impact of board gender diversity on carbon emissions performance. The positive effect of gender-diverse boards on emissions reduction is more substantial in cultures characterized by high uncertainty avoidance, long-term orientation, and indulgence. Overall, the study underscores the importance of culturally tailored approaches to corporate governance that account for the moderating influence that national culture plays on the effectiveness of gender-diverse boards in meeting sustainability targets.
