Corporate Attention to Severe Physical Climate Risk and Audit Pricing: Empirical Evidence from the Text of Listed Companies' Annual Reports
Journal of Innovation and Development, (2026), Vol.17, No.2, pp.44-51
Published: October 15, 2026
DOI: 10.54097/s4hca518
Abstract
This study examines whether climate risk information in annual reports is reflected in audit pricing. Using Chinese A-share listed firms from 2007 to 2024, we construct measures of overall and type-specific corporate attention to climate risk. Corporate attention to severe physical climate risk is significantly and positively associated with audit fees, whereas attention to overall climate risk, transition risk, and chronic physical risk shows no significant association. The main result remains unchanged after reducing the set of control variables, changing the winsorization treatment, and applying propensity score matching. In the channel tests, attention to severe physical climate risk is positively associated with audit response complexity, which is also positively associated with audit fees. However, the formal indirect effect is not statistically significant, so the evidence provides only preliminary support for the audit-effort channel. These findings provide empirical evidence that the relationship between climate risk information and audit pricing depends on the type of risk involved.
Keywords:
Climate risk attention; Severe physical risk; Audit fees; Audit response.
APA Citation:
Jingyi Liu (2026). Corporate Attention to Severe Physical Climate Risk and Audit Pricing: Empirical Evidence from the Text of Listed Companies' Annual Reports. Journal of Innovation and Development, 17(2), 44-51. https://doi.org/10.54097/s4hca518
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