Accounting, Organizations and Society xxx (xxxx) xxx

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Accounting, Organizations and Society

journal homepage: www.elsevier.com/locate/aos

Auditor sustainability focus and client sustainability reporting

Manlu Liu a, Jing Tang a, Stephanie Walton b, *, Yiyang Zhang c, Xinlei Zhao d
a
Rochester Institute of Technology, USA
b
Louisiana State University, USA
c
Youngstown State University, USA
d
University of Toledo, USA

A R T I C L E I N F O A B S T R A C T

Handling Editor: Prof. M. Peecher We examine the relationship between auditors’ sustainability focus and their clients’ sustainability reporting.
Sustainability reporting is of increasing social and regulatory interest following SEC guidance on the provision of
Keywords: sustainability disclosures. Auditors can bridge the gap between a myriad of technical guidance and their clients.
Sustainability reporting Positive assortative matching could occur between clients who plan to increase their sustainability reporting and
Disclosures
auditors who have a greater sustainability focus, with sustainability alignment comprising part of client strategy
Positive assortative matching
for credibly reporting sustainability information. Specifically, we examine auditor-client sustainability alignment
Auditor focus
Twitter through the association between relative auditor sustainability focus and their clients’ sustainability disclosures
and activities. We measure auditors’ sustainability focus by examining the sustainability focus in auditors’
tweets. We find that auditor sustainability focus is positively associated with client sustainability reporting,
through both sustainability disclosures and social and governance sustainability activities. Our study provides a
greater understanding of auditor involvement in sustainability reporting.

… The PCAOB can play an important role in connection with ESG
disclosures, including disclosure provided by public companies ….
the audit firm role, if any, in providing assurance for ESG metrics as
part of the audit, whether in SEC filings or in sustainability reports, is
an important topic that should be addressed. The PCAOB, through
possible revisions to our “other information” standard, could, in my
view, bring the stakeholders together to discuss how best to resolve
this issue.
– PCAOB Board Member J. Robert Brown Jr. November 4, 2020
1. Introduction
We investigate the relationship between auditor sustainability focus
and client sustainability reporting. There has been increasing interest
from the Securities and Exchange Commission (SEC) and the Public
Company Accounting Oversight Board (PCAOB) surrounding
sustainability disclosures and the auditor’s role in sustainability
reporting. Initially issuing guidance in 2010 regarding existing climate
change risk disclosure requirements (Lee, 2021), in March 2022 the SEC
proposed significant rule changes that would require firms to include
climate-related disclosures including sustainability risks and relevant
risk management processes, risk materiality and impact, greenhouse gas
emissions, and climate-related events (SEC, 2022). Kiernan (2022) notes
that the climate change disclosure rule change is among the most
ambitious and closely watched items of SEC Chairman Gary Gensler’s
agenda and would require more standardized reporting about environ­
mental risks, given that existing material sustainability risk disclosures
vary from firm to firm and are of limited use to investors. SEC
Commissioner Peirce (2022) further argues that the proposed rule would
undermine existing rules covering material risk disclosures, possibly
reducing disclosure reliability, consistency, and comparability.
Auditors are poised to bridge the gap between existing and proposed

* Corresponding author.
E-mail addresses: manluliu@saunders.rit.edu (M. Liu), jtang@saunders.rit.edu (J. Tang), swalton1@lsu.edu (S. Walton), yzhang03@ysu.edu (Y. Zhang), xinlei.
zhao@utoledo.edu (X. Zhao).

https://doi.org/10.1016/j.aos.2023.101512
Received 6 June 2022; Received in revised form 12 September 2023; Accepted 20 September 2023
0361-3682/© 2023 Elsevier Ltd. All rights reserved.

Please cite this article as: Manlu Liu et al., Accounting, Organizations and Society, https://doi.org/10.1016/j.aos.2023.101512
M. Liu et al.
frameworks, sustainability guidance, and clients’ sustainability report­
ing.1 Center for Audit Quality (CAQ) Executive Director Julie Bell
Lindsay (CAQ, 2020a, p. 1) succinctly notes that auditors “bring the
independence, expertise, and experience necessary to enhance the reli­
ability of ESG reporting as this information plays a heightened role in
investment strategies.” Indeed, Pflugrath, Roebuck, and Simnett (2011)
find that sustainability reporting credibility is perceived to be higher
when assurance is provided by professional accountants rather than
sustainability consultants. Audit and affiliated firms are key players in
sustainability reporting (O’Dwyer, 2011), and globally provide 63
percent of assurance on sustainability reporting (International Federa­
tion of Accountants, 2021). Anecdotally, it appears that firms
acknowledge the strength of their auditors’ sustainability practices, with
some firms including sustainability in their request for proposal pro­
cesses and in discussions with their existing auditors.
As such, we argue that positive assortative matching (Becker, 1973;
Bills & Jensen, 2010; Gale & Shapley, 1962) can occur where clients
who already were planning to ramp up their sustainability reporting
seek out and match themselves with auditors demonstrating greater
sustainability focus.2 That is, auditor-client alignment on sustainability
commonalities is associated with greater client sustainability reporting.
Aligning with an auditor that is a sustainability leader can serve as part
of a broader client strategy for credibly reporting sustainability infor­
mation. If clients seek greater sustainability focus and select auditors
with that focus, then auditors can play a key role in client firms’
reporting strategy.
PCAOB board member J. Robert Brown Jr. (2020, p. 1) states
disclosure “suffers from a number of qualitative concerns that limit its
utility” and results in consistency and reliability concerns. Sustainability
matters “can and do directly affect the financial statements” (p. 1) and
“independent accounting firms examine these estimates and valuations
as part of the audit,” providing some level of completeness and reli­
ability (Brown Jr., 2020, p. 3). While auditor sustainability focus is not
likely causing clients to change their sustainability reporting practices,
auditor-client sustainability alignment can enable auditors to serve in a
unique position to translate technical, complex sustainability standards
and guidance from multiple sources, such as those from Global
Reporting Initiative (GRI), International Organization for Standardiza­
tion (ISO), and Sustainability Accounting Standards Board (SASB), to
useable information to their clients, relative to the needs and risks faced
by their clients.3 Auditors can showcase their cross-functional sustain­
ability expertise to clients who are seeking to meet their sustainability
1
Sustainability is a significant global issue with risks that could be material
to many firms, including climate change and social outcomes. We recognize
that there are a variety of terms surrounding sustainability activities including
corporate social responsibility (CSR), sustainability, and environment, social,
and governance (ESG). While CSR reflects qualitative social responsibility ef­
forts, ESG helps quantify such social efforts (Hung, 2021). We use the term
sustainability broadly in our context to capture both qualitative and quantita­
tive efforts.
2
Positive assortative matching occurs when parties match with their peers
based on the likeness of characteristics (e.g., Becker, 1973; Eeckhout & Kircher,
2018). Transparency reduces search costs associated with assortative matching
decisions, increasing matching certainty (Shimer & Smith, 2000).
3
Other sources of sustainability guidance, recommendations, and standards
include but are not limited to Business Standards Institution (BSI), Corporate
Average Fuel Efficiency (CAFE), Chemical Assessment and Ranking System
(CARS), Coalition for Environmentally Responsible Economies (CERES), Lead­
ership in Energy and Environmental Design (LEED), Occupational Health and
Safety International Standards (OHSAS 18000), Social Accountability 8000 (SA
8000), Sustainability Competency & Opportunity Rating & Evaluation
(SCORE), Social and Ethical Accounting, Auditing and Reporting (SEAAR), Task
Force on Climate-related Financial Disclosures (TCFD), Unified Green Cleaning
Alliance (UGCA), and Waste Electrical and Electronic Equipment Directive
(WEEE Directive).
2
Accounting, Organizations and Society xxx (xxxx) xxx
needs, with greater auditor sustainability focus yielding positive
matching decisions in the two-sided auditor-client matching market
(Bills & Jensen, 2010). Therefore, we posit that auditor sustainability
focus is positively associated with client sustainability reporting.
However, the possibility exists that even with greater auditor sus­
tainability focus that there is no association with any component of their
clients’ activities. Auditors are not required to perform specific pro­
cedures over sustainability to the extent that it does not affect material
risks or financial reporting (PCAOB, 2003). A reluctance to publicly
discuss sustainability risks, as evidenced by the SEC’s push for
expanded, mandatory disclosure practices, could act as resistance for
greater sustainability discussions within an auditor-client relationship.
Nonetheless, we argue that auditors have the expertise to enhance the
reliability of sustainability information. Auditors have extensive expe­
rience in assessing and responding to risks, complying with various
standards and frameworks, incorporating qualified specialists, and
independently evaluating information (O’Dwyer, 2011; CAQ, 2020b).
As sustainability is a strategic firm issue, auditors can facilitate the role
of accounting to assess the environmental, social, and governance out­
comes of firm operations and the broader societal impact.
While auditor-client discussions are private, we use public audit firm
communications to account for the relative focus that an auditor places
on sustainability, including real efforts such as acquiring sustainability
experts, training, services, and other investments (Boudreau, 2022).
Specifically, we use Twitter as an instrument to capture the extent of
auditors’ sustainability focus, measured through the ratio of
sustainability-focused communications to total communications for
each client fiscal year. While Eschenbrenner, Nah, and Telaprolu (2015)
note that public accounting firms use Twitter for knowledge sharing and
marketing purposes, we gain additional understanding of the tweeting
process by conducting 11 semi-structured interviews with communica­
tion specialists and leaders representing 9 accounting firms. We find that
tweets are carefully crafted by communication departments and are
subject to internal quality and review processes. As audit firm tweets are
not randomly developed by individual auditors and rather reflect stra­
tegic attempts to enhance awareness of an auditor’s thought leadership,
expertise, and credibility, we substantiate that tweets are a reasonable
measure for auditor sustainability focus.
Therefore, we examine whether using an auditor with greater sus­
tainability focus is associated with greater client sustainability report­
ing, measured through Item 1A risk factor disclosures and sustainability
activities. We focus on Item 1A disclosures for three reasons. First, Item
1A disclosures, while not audited, are regulatory disclosures that at
minimum are read by financial auditors as part of the 10-K filing without
the provision of additional assurance or attestation services (PCAOB,
2003).4 Second, the SEC (2022) proposal for additional sustainability
disclosures largely focuses on sustainability risks and relevant risk
management processes, which would be included in Item 1A disclosures.
Third, the effects of urgent sustainability concerns, such as climate
change and biodiversity loss, likely pose major risks to firm’s operations
(AICPA & CAQ, 2021). The United States Government Accountability
Office (2020) notes that large investors seek additional disclosures to
better understand and compare firms’ sustainability risks. We measure
sustainability activities through Sustainalytics average monthly histor­
ical weighted sustainability scores, reflecting client activities across
environmental, social, and governance activities. While we expect that
sustainability scores reflect clients’ real behavior, we recognize that
4
PCAOB AS 2710 states that auditors should read other information and
consider whether it is materially inconsistent with audited financial statement
information or information in the auditor’s report (PCAOB, 2003). If there is a
material inconsistency, then the auditor can request the client to revise the
other information and if the client elects not to do so, the auditor can
communicate the inconsistency with the audit committee and consider modi­
fying the audit report with an explanatory paragraph.
M. Liu et al.
there could be a disconnect between scores and real behavior. Therefore,
we discuss our sustainability activities findings based solely on the
measured sustainability scores.
Our results are consistent with auditor-client sustainability align­
ment. We find a positive and significant association between auditor
sustainability focus and client sustainability disclosures. We note that
clients report greater disclosures up to two years in the future. We also
find a positive association between auditor sustainability focus and
client social and governance sustainability activities up to two years in
the future. That is, we find evidence consistent with a difference in
sustainability scores. We find that positive assortative matching between
auditors and their clients based on sustainability focus is associated with
not only greater disclosures but also greater sustainability activities. One
possible explanation is that the facilitation of sustainability discussions
occurs relative to not only existing guidance but also potential future
guidance. Additionally, upon further investigation of auditor charac­
teristics that moderate auditors’ sustainability role we find potential
mechanisms include the use of a national industry specialist or a Big 4
auditor. Further, we find a positive association between switching to an
auditor with greater sustainability focus and Item 1A disclosures,
consistent with clients aligning themselves with auditors who have
stronger sustainability focus.
Our study provides several contributions to the sustainability and
auditor matching literatures. First, we provide a greater understanding
of auditor involvement in sustainability reporting. As PCAOB board
member J. Robert Brown Jr. (2020) notes, sustainability issues can have
a direct impact on financial statements. Leveraging their independence
and expertise (CAQ, 2020b), auditors can play a critical role in
communicating and distilling sustainability information to their clients.
Second, we find that auditor-client alignment on sustainability is asso­
ciated with greater sustainability reporting. We contribute to a nascent
stream of literature examining auditor socio-political engagement,
including sustainability (e.g., Duff, 2016) and political issues, such as
the Brexit referendum where audit firms made Brexit disclosures on
Twitter (e.g., Lynn, Rosati, & Murphy, 2021). While we specifically
examine auditor sustainability focus, other auditor focuses within the
social-political realm could also be associated with client activities.
Third, we are unaware of any evidence that auditor communications
outside of an auditor’s report are associated with the activities of audit
clients. While there is limited evidence that audit reporting decisions
such as issuing a critical audit matter affects clients’ operating decisions
(e.g., Bentley, Lambert, & Wang, 2021), most auditor-client communi­
cation studies focus on exchanges between the two parties and address
how the activities of audit clients influence the actions of audit firms (e.
g., Herda & Lavelle, 2013; Shu, 2000) or the actions of individual au­
ditors (e.g., Bennett & Hatfield, 2018; Commerford, Hatfield, & Hous­
ton, 2018). As such, using a sustainability setting our study provides
novel insight on the relationship between auditors and their clients’
activities.
Our study also complements additional SEC and PCAOB interest in
sustainability disclosures and determining the role of the auditor. Au­
ditors can serve in a positive capacity to foster additional sustainability
considerations. Clients can benefit from the dissemination of additional
useful information that has ramifications beyond financial reporting,
impacting operations and society at large. External stakeholders also
benefit from additional sustainability disclosures that provide greater
transparency about sustainability risks.
2. Theoretical framework
2.1. Sustainability as a strategic issue
Sustainability is a strategic issue for firms, with several worldwide
trends promoting greater attention to the topic including climate
change, natural resources under pressure, population growth and rapid
development, and health concerns (Hitchcock & Willard, 2009).
3
Accounting, Organizations and Society xxx (xxxx) xxx
Sustainability is also a natural extension of other organizational
changes. Benefits of pursuing sustainability include reducing energy,
waste, and costs (e.g., Nishant, Goh, & Kitchen, 2016), differentiating
the firm (e.g., Flammer, 2015; Hull & Rothenberg, 2008), sidestepping
future regulations (e.g., Innes & Sam, 2008), creating innovative new
products or processes (e.g., Porter & Kramer, 2011; Shen, Tang, &
Zhang, 2016), opening new markets (e.g., De Meyst, Cardinaels, & Van
den Abbeele, 2023), attracting and retaining employees (e.g., El Ghoul,
Guedhami, Kwok, & Mishra, 2011), improving firm image with share­
holders and external stakeholders (e.g., Hummel & Schlick, 2016),
reducing legal risk and insurance costs (e.g., Koh, Qian, & Wang, 2014),
and providing a higher quality of life (Christensen, Hail, & Leuz, 2021;
Hitchcock & Willard, 2009). There are also several threats if firms do not
pursue sustainability including liability for pollutants (e.g., Gramlich &
Huang, 2022), supply problems with raw materials and energy (Kim &
Davis, 2016), image attacks (e.g., Hummel & Schlick, 2016), legal risks
(e.g., Koh et al., 2014), bad-mouthing of product (Hitchcock & Willard,
2009), and being closed out of certain markets (e.g., Dowell, Hart, &
Yeung, 2000; Hart & Zingales, 2017).
However, firms face risks in pursuing sustainability activities
including greenwashing, cannibalizing existing business, and raising
unrealistic expectations (Hitchcock & Willard, 2009). Notably, multiple
sources of sustainability standards and guidance exist, potentially
leading to concern over how to implement an integrated approach to­
wards sustainability activities. For instance, GRI and CERS provide
guidelines for evaluating social and environmental performance, but
each set of guidance is framed differently and could affect different
portions of a firm’s operations (Hitchcock & Willard, 2009). ISO
26000:2010 provides details to all types of organizations regardless of
size or location on sustainable development and is intended to extend
beyond legal compliance. However, ISO (2010) cautions that the stan­
dard is not a management system, nor is it intended to be used for cer­
tification, regulatory, or contractual use. Further, SASB (2022a)
published standards in 2018 and has a projects-based focus on a variety
of topics including human capital, greenhouse gas emissions, and ma­
terial sourcing and efficiency.
Although the SEC issued guidance in 2010 on disclosing material
risks, including those relating to sustainability, the growing breadth of
sustainability guidance and increasing topical importance have renewed
interest in providing clearer standards on what should be disclosed to
external stakeholders. Proposed 2022 guidance would require firms to
expand climate disclosures, including emissions and risks. While the
current SEC Chairman Gary Gensler is in favor of expanded sustain­
ability disclosures, prior SEC Chairman Jay Clayton feels that the pro­
posed guidance extends beyond the scope of the SEC and is politically
motivated (CNBC, 2022). Likewise, Commissioner Peirce (2022) has
expressed skepticism and states that the guidance could reduce disclo­
sure reliability, consistency, and comparability by undermining existing
risk disclosure rules, which would include sustainability implications.
The extant literature similarly has differing perspectives on the role of
mandated reporting. While Darendeli, Fiechter, Hitz, and Lehmann
(2022) note that stakeholders use supply chain sustainability reporting,
which could be benefited by increased reporting, Christensen (2022)
and Karpoff, Litan, Schrand, and Weil (2022) argue that this is not
enough reason to mandate sustainability reporting and that the SEC may
be ill-suited to adapt to such changes.
Big 4 audit firms have substantial global sustainability assurance
market shares and are heavily investing in sustainability hiring and
training (Boudreau, 2022; O’Dwyer, 2011). Each Big 4 audit firm has
submitted a comment letter in agreement with the SEC proposal. KPMG
(2021, p. 1) believes that the “Commission should incorporate, endorse
or otherwise support a globally accepted ESG reporting system that
would set baseline requirements” as numerous sources have indepen­
dently developed frameworks and guidance, duplicating requirements
and increasing the need for collaboration. A uniform global framework
would increase disclosure consistency and comparability, with
M. Liu et al.
PricewaterhouseCoopers (PwC) (2021) recognizing that industry spe­
cific guidance can serve as a supplement to foundational disclosures
located in 10-K filings. EY (2021) similarly remarks that disclosures
should reflect a broad approach to sustainability, extending beyond
climate change. Currently, Deloitte (2021, p. 1) notes “a wide variation
in where companies are on the journey to integrate ESG considerations
into their enterprise risk management system, strategy, and core busi­
ness activities.” Collectively, the comment letters suggest that auditors
can serve in a sustainability capacity to their clients, particularly
regarding material risks.
2.2. Sustainability reporting
As part of a larger paradigm shift, sustainability reporting is not only
a disclosure but also a key component of the communication process
between a firm and its external stakeholders (Wallage, 2000). The
reporting process can be driven by accountability in addition to stan­
dards that can help facilitate comparability, information interpretation,
relevance, and assurance. Spence and Rinaldi (2014) use the concept of
governmentality to develop a theoretical framework for sustainability
accounting and find that decision makers seek to include the social and
environmental impacts of corporate actions in decision making pro­
cesses along with the economic impacts. Yet, Cho, Laine, Roberts, and
Rodrigue (2015) argue that existing sustainability disclosures are sus­
ceptible to organized hypocrite, with a large gap between sustainability
communications and behavior. The authors contend that there are
limited prospects that sustainability reporting will evolve into substan­
tive disclosures as contradictory societal and institutional pressures
make firms engage in hypocrite and develop organizational façades.
Similarly, there is a complex interdependent relationship between
securing legitimacy and stakeholders, including clients commissioning
sustainability assurance engagements, report users, and clients’ internal
risk departments approving the wording of assurance statements
(O’Dwyer, Owen, & Unerman, 2011). Conflicting stakeholder demands
could result in a setting where sustainability reporting is not prioritized,
even with increasing societal and regulatory interest. However, we
believe that auditors can serve a novel role relative to client sustain­
ability reporting.
Sustainability disclosures are negatively associated with earnings
management metrics (Al-Shaer, 2020) and product market competition
(Ryou, Tsang, & Wang, 2022), while positively associated with reliance
on public rather than private debt (Tan, Tsang, Wang, & Zhang, 2020).
Such relationships appear to be affected by auditor effort (Al-Shaer,
2020) and the likelihood of seeking out assurance on sustainability re­
ports (Ryou et al., 2022), suggesting that auditors can affect the rela­
tionship between a client’s sustainability actions and financial
reporting. To the extent that auditors are evaluating the relevance and
reliability of sustainability evidence obtained from external sources, the
auditor must specifically consider appropriate criteria at the onset of the
engagement in line with AS 1105 (PCAOB, 2021; Wallage, 2000). In­
ternal incentives for higher sustainability-related audit quality include
an emphasis on stakeholder engagement and executive compensation
schemes while external audit quality factors include auditor competence
and specialization (Dalla Via & Perego, 2020). Assurance of voluntary
sustainability disclosures positively affects investor evaluation of sus­
tainability performance, resulting in higher weighting of information
and higher investing judgments (Reimsbach, Hahn, & Gürtürk, 2018),
although this effect depends on how assurance reports are worded (e.g.,
Vera-Muñoz, Gaynor, & Kinney, 2020).
As sustainability disclosures made in regulatory filings are most
likely correlated with underlying sustainability activities, and mea­
surements of sustainability activities likely reflect disclosures to some
capacity, we examine sustainability reporting through both disclosures
and activities. We focus our sustainability disclosure discussion on dis­
closures made in 10-K filings since the auditor is more likely to see such
disclosures without a separate assurance or attestation engagement (e.
4
Accounting, Organizations and Society xxx (xxxx) xxx
g., PwC, 2021) and such disclosures reflect the relationship between
sustainability activities and financial reporting (AICPA & CAQ, 2021;
Peirce, 2022). Further, the SEC (2022) proposal for additional sustain­
ability disclosures largely focuses on risks and relevant risk management
processes, which would be included in Item 1A disclosures. Sustain­
ability disclosures could also reflect a commitment to make actual
changes, encouraging sustainability activities and enabling stakeholders
to apply pressure to firms to change their sustainability scores relative to
current and future standards and guidance. Therefore, sustainability
activities reflect actions which could have financial and nonfinancial
performance implications.
2.3. Positive assortative matching
Assortative matching deals with the matching of two parties based
on either positive or negative characteristics (Gale & Shapley, 1962).
Positive assortative matching occurs when parties match with peers
based on characteristics in common, increasing the likeness between
two matching parties (Becker, 1973). The auditor-client pairing decision
is a two-sided matching market, where both auditor and client charac­
teristics can affect auditor selection. Higher (lower) quality auditors
match with higher (lower) quality clients, after controlling for other
factors that could affect the auditor selection process (Bills & Jensen,
2010). Li, McNichols, and Raghunandan (2022) provide additional ev­
idence that auditors and clients engage in positive assortative matching
based on client quality and note that matching is an important consid­
eration in understanding auditors’ role in clients’ financial reporting
practices. Positive assortative matching further extends to reputation
commonalities (Cook, Kowaleski, Minnis, Sutherland, & Zehms, 2020).
Cook et al. (2020) find that clients of the same auditor have similar
misconduct profiles and auditor-client pairs with similar misconduct
profiles are more likely to have a continuing relationship than mis­
matched pairs. Thus, positive assortative matching could also occur
based on other auditor and client commonalities such as topical focus,
including sustainability focus.
Greater auditor sustainability focus, where sustainability is an
important issue to the auditor, could foster additional sustainability
discussions within the context of the main audit engagement. As such,
clients who already were planning to ramp up their sustainability
reporting and have greater sustainability focus could therefore seek out
and match themselves with auditors demonstrating greater sustain­
ability focus. Public accounting firms use sustainability as a mechanism
to maintain pragmatic legitimacy with constituents, including current
and potential clients (Duff, 2017). The demonstration of auditor sus­
tainability focus can reduce client search costs associated with assorta­
tive matching decisions, increasing the certainty of matching on
sustainability importance (e.g., Shimer & Smith, 2000). Thus, positive
assortative matching (Becker, 1973; Bills & Jensen, 2010; Gale &
Shapley, 1962) between auditors and their clients could occur based on
sustainability commonalities.
Dunn and Mayhew (2004, p. 36) argue that “clients select auditors as
part of their overall disclosure strategy.” Aligning with an auditor that is
a sustainability leader can serve as part of a broader client strategy for
credibly reporting sustainability information. If clients seek greater
sustainability focus and select auditors with that focus, then auditors can
play a key role in client firms’ sustainability reporting strategy. Within
engagements with clients having a similar sustainability focus, auditors
could serve in an information intermediary role consistent with Rose
(1999, p. 79) as “an independent, profit maximizing economic infor­
mation processing system performing its activities (information acqui­
sition, processing, and dissemination) on behalf of other agents’
information needs.”
As sustainability developments originate from a variety of sources,
including third-party agencies, standards boards, government entities,
and regulators, among others, auditors with greater sustainability focus
can use their expertise to compile, process, and distribute sustainability
M. Liu et al.
information that is timely, relevant, and reliable to the needs and risks of
their sustainability focused clients (e.g., CAQ, 2020a; 2020b). As such,
we posit that auditor-client alignment on sustainability commonalities is
positively associated with client sustainability reporting. We do not
argue that auditors are causing their clients to change their sustain­
ability reporting. Rather, auditor sustainability focus can enable clients
to decide whether sustainability matching would fit with broader client
reporting strategies. Clients with greater sustainability focus that align
with an auditor with a similar sustainability focus could have greater
synthesis and communication of sustainability information within their
audit engagement, given auditor sustainability expertise, in turn
reducing sustainability information processing costs.
The possibility exists, however, that auditor-client sustainability
matching may not be associated with clients’ sustainability reporting.
First, auditors might not serve as a primary sustainability information
intermediary. Following Drake, Thornock, and Twedt (2017), the
internet could serve as a low-cost way for clients to source and process
various sustainability guidance, which could then be incorporated into
their sustainability reporting outside of the audit engagement. Auditors
with greater sustainability focus could therefore serve in a limited sus­
tainability capability despite having a similar focus as their clients.
However, Dube and Zhu (2021) provide initial evidence that sustain­
ability reporting is malleable to external parties. Specifically, greater
negative information shared through Glassdoor employee satisfaction
reviews is associated with a subsequent change in employment sus­
tainability behavior. Similarly, Gallemore, Gipper, and Maydew (2019)
provide evidence that parties located at the center of important financial
relationships can assist in translating technical guidance into useful
client information. Specifically, the authors find that banks can act as tax
planning information intermediaries for their clients, impacting tax
reporting. Therefore, as third-party advisors, auditors could facilitate
sustainability discussions with similarly focused clients.
Further, auditors might not be willing to utilize their sustainability
focus on their audit clients without having separate sustainability
assurance or attestation engagements, despite having a similar sustain­
ability focus as their clients, or the extent of sustainability discussions
spurred might not be substantial within the audit engagement. However,
the extant literature suggests that auditors can facilitate information
spillovers across engagements, which could extend to sustainability
focus. Aobdia (2015) and Kang, Lennox, and Pandey (2022) examine
information spillover from sharing the same auditor and audit partner,
respectively. The studies find that auditor information spillover stem­
ming from matching on the same auditor can occur incremental to in­
dustry specialization, and in instances where clients are unconcerned
with information spillovers, there can be lower audit fees and fewer
misstatements. Further, Liu (2022) provides evidence that auditors
engage in cross-client learning, with direct client experiences, specif­
ically cybersecurity breach experience, leading to greater learning
distinct from reputational concerns. As such, auditor sustainability focus
can present additional opportunities to clients with similar sustainabil­
ity focuses to match with their auditors relative to client needs and risks.
Consequently, we posit that positive assortative matching on sus­
tainability focus between auditors and their clients can occur. That is,
auditor sustainability focus is positively associated with client sustain­
ability reporting. Auditors have a widespread presence providing ser­
vices to a variety of clients and have expertise in developing and
implementing various standards and reporting guidance. For clients
strategically seeking to credibly report their sustainability information,
matching with auditors with greater sustainability focus can facilitate
discussions on the impact of client operations, the applicability of
various existing and proposed sustainability standards and guidance,
and sustainability reporting (CAQ, 2020b). Therefore, our hypothesis is.
H1. Auditor sustainability focus is positively associated with client
sustainability reporting.
5
Accounting, Organizations and Society xxx (xxxx) xxx
3. Auditor focus and Twitter use
3.1. Twitter as a communication source
As it is difficult to obtain information on a wide scale about private
communications between auditors and their clients, we utilize a public
data source, Twitter, to investigate relative auditor sustainability focus.5
Specifically, we examine the content of auditor tweets relative to the
total volume of information communicated via Twitter, focusing on the
12 PCAOB annually inspected audit firms as of 2019.6 We are not trying
to identify a causal effect of Twitter, and rather use Twitter as a way to
capture auditor sustainability focus.
Twitter offers a channel for organizations to quickly communicate
information, including financial disclosures (Bartov, Faurel, & Mohan­
ram, 2018), nonfinancial disclosures (Lei, Li, & Luo, 2019), and corpo­
rate strategy (Kumar, Bhaskaran, Mirchandani, & Shah, 2013), which
can strategically influence stakeholders (Blankespoor, 2018) and shape
their overall information environments (e.g., Jung, Naughton, Tahoun,
& Wang, 2018). Firms also use Twitter to communicate sustainability
efforts and promote organizational values (Kesavan, Bernacchi, &
Mascarenhas, 2013). Suddaby, Saxton, and Gunz (2015) and Eschen­
brenner et al. (2015) provide initial evidence that public accounting
firms engage in social media activity to enhance their professional
image, establish reputations, promote marketing, seek employees,
improve client relationships, and communicate professional change.
We argue that audit firms can use Twitter to strategically commu­
nicate topical focus, beyond establishing professional reputations. As
firms use Twitter to disseminate information already disclosed in other
channels (Prokofieva, 2015), the extent to which audit firms commu­
nicate about sustainability on Twitter likely reflects other marketing and
real efforts, including acquiring sustainability experts, training, and
other investments (Boudreau, 2022). That is, greater sustainability
communications via Twitter reflect greater auditor sustainability focus.
3.2. Accounting firm twitter use
Using a qualitative semi-structured interview method with relevant
experts (Maksymov, Pickerd, Lowe, Peecher, & Reffett, 2020; Malsch &
Salterio, 2016; Power & Gendron, 2015) can provide additional support
and insight to archival method results (e.g., Donelson, Ege, Imdieke, &
Maksymov, 2020). To gain better institutional background into how
5
Created in October 2006, Twitter historically was a free service that allows
users to communicate via text-based messages of up to 280 characters, known
as “tweets.” As of July 2023, Twitter has been rebranded as X. Twitter provides
a novel and unique opportunity for users, including clients, auditors, and
external stakeholders, to communicate directly with each other through words,
attached pictures, videos, GIFs, quoted articles, referenced websites, and
hashtags, including asking questions, expressing opinions, and adding to dis­
cussions. Twitter has grown from 30 million monthly active users in the first
quarter of 2010 to 330 million unique users by the first quarter of 2019 (Sta­
tista, 2019), making it both the fastest growing and one of the largest social
networks in the US. Twitter’s decision to expand the character limit in 2017
from 140 to 280 characters had little effect on tweet length, with the most
common tweet length being 33 characters (Perez, 2018).
6
Annually inspected audit firms provide audit opinions for more than 100
public issuers per year. These firms audit over 65 percent of all SEC registrants
and are more likely to face higher reputational and litigation risks than other
auditors (https://blog.auditanalytics.com/who-audits-public-companies-2020
-edition/). Annually inspected audit firms are expected to have higher audit
quality than other available auditors (Khurana, Lundstrom, & Raman, 2021). In
addition, these auditors are also more likely to use Twitter. Specifically, we
select BDO USA, Cohen & Company, Crowe LLP, Deloitte & Touche LLP, Ernst
& Young LLP, Grant Thornton LLP, KPMG LLP, Malone Bailey LLP, Marcum
LLP, Moss Adams LLP, PricewaterhouseCoopers LLP, and RSM US LLP, which
are the 2019 annually inspected firms. We obtain the list from: https://pcaobus.
org/oversight/inspections/basics-of-inspections.
M. Liu et al.
accounting firms utilize Twitter, we conduct 11 semi-structured in­
terviews with communication specialists and leaders directly involved
in the use of Twitter and the tweeting process representing 9 accounting
firms.7 Table 1, Panel A presents descriptive statistics of our in­
terviewees. On average, participants have 12 years of experience, and
most are at the manager, director, or partner level. A variety of ac­
counting firm sizes are represented from global to regional. Panel B
presents themes on Twitter use, the tweeting process, and tweet effec­
tiveness, frequency, and content.
Our interviews use open-ended questions to guide responses (Yin,
2018). During the interview, we asked participants the following key
questions, using probing questions as needed “to draw out more com­
plete stories from subjects” (Lune & Berg, 2017, p. 64): (1) How is Twitter
viewed/used relative to other available social media platforms? (2) What is
(are) the overall goal(s) of using Twitter? (3) What are the specified objec­
tives of a tweet/tweeting activity? (4) Who writes, edits, and approves the
tweets? What is their rank within the audit firm? (5) To what extent are
individual auditors (audit partners) involved in the tweeting process? (6)
How is the relative “effectiveness” of a tweet judged? (7) Are there any key
topical areas that are tweeted about? (8) How is it determined how often to
tweet? Further, we conduct deviant case and member checking analyses
suggested by Malsch and Salterio (2016).8
We first find that Twitter is used similarly to other social media
platforms, including LinkedIn, as a way to connect with stakeholders. As
a “conduit to get people aware, and then focused on where that content
resides, and who the people are that manage the content,” (P1) tweets
can start conversations. Twitter is a “real time channel that you would
want to use to capture people’s attention quickly” (P10) for “news­
worthy content” (P9). “It’s an area for us to really try to focus on. What
are those topics that we care deeply about as a brand and to put some of
those different things out there?” (P4). In some cases, Twitter is “the
only platform that will share all of our insights” (P7). Twitter is used for
“thought leadership and amplifying the type of work that we do” (P6)
and is “a great channel for us to help educate the market” (P3).
While some firms appear to first think strategically “about the con­
tent and message” (P3) rather than social media platform, other firms
adjust the “intentionality of the type of content and types of channels
that we use” (P4) to reach the appropriate audiences. Notably, Twitter
use can position the accounting firm and its thought leadership, leading
with their public interest role.
We have a role in the capital markets to serve the public interest,
drive trust and confidence in information that’s presented and
7
Institutional Review Board approval was obtained prior to engaging in any
recruitment or interviews. Our interviews were conducted over Zoom, Micro­
soft Teams, phone, and email between January 2023 and February 2023. In­
terviews conducted by Zoom, Microsoft Teams, and phone were recorded so
that the conversations could be transcribed verbatim. On average, interviews
lasted approximately 25 min (standard deviation of 7.41 min). Email response
length is similar to the interview transcription length. A follow-up Zoom call
(16 min) and follow-up emails were used to source additional clarifying in­
formation. Email interviews offer participants control over their level of
participation, are not limited by the time constraints of a scheduled interview,
and enable iterative exchanges (e.g., Hawkins, 2018). One of the coauthors
identified the representative themes. This coauthor, along with another coau­
thor, then independently coded pertinent text from the interview transcripts
into each theme. The mean kappa is 0.86, indicating high agreement between
the two coders (Landis & Koch, 1977). All coding differences were subsequently
reconciled. Quotes were then selected that are particularly insightful or
poignant in conveying an idea or theme across interviews.
8 have to really follow the line of independence. … But I think we sort
First, we examined the transcripts for any data that “do not support, or
appear to contradict, patterns of explanations that are emerging from data
analysis” (Malsch & Salterio, 2016, p. 13). Second, we sent “a draft of the
manuscript to participants to gather their comments and observations” (Malsch
& Salterio, 2016, p. 13). We do not note any elements that alter the in­
terpretations of our findings.
6
Accounting, Organizations and Society xxx (xxxx) xxx
consumed in the capital markets. So, we really look at it as this is just
an evolution in corporate reporting. It’s measuring different types of
data information, assembling it in a way that is prepared for
disclosure to really help inform a user around risk and opportunity,
and how an organization is really driving their strategy and creating
value into the long term. (P2)
As such, tweets can enhance thought leadership and expertise,
branding, and credibility.
Tweets can show “how we can assist our clients in helping to
accelerate their own strategies, and then the way in which they
communicate effectively to their stakeholders” (P2) in addition to
making “sure that people are aware that we’re delivering it [services]”
(P1). Further, one goal is “to educate our clients on important infor­
mation that they need to know about, and to show us as leading experts
in those areas” (P6) helping to “communicate our credibility in various
areas” (P8). Cross-functionality is considered in developing tweets with
interviewees noting that their firms “like to think a lot of our work across
the [audit] firm does have applicability to other things where it’s
permissible” (P4), “try to give equitable coverage to various service
lines” (P10), and have social media teams with “people from all the
other teams as well” (P5).
The objectives of a specific tweet or tweeting activity vary depending
on different campaigns, but the starting point includes “educating our
clients and hopefully attracting new business” (P6), gaining “brand
awareness and relevance” (P9), “awareness and consistency” (P11), and
“what our thought leaders are talking about at the time” (P8). Impor­
tantly, one participant noted that tweets are not intended to push a
particular social agenda and rather tweets are “just trying to push out
information about our expertise” (P1). The audit firm is “independent
and impartial” and “we’re saying we are here independent, objective.
We understand the standards, and we can help you report, to lend trust
and value to your investors” (P1).
Focusing on sustainability, tweets can educate and raise awareness.
One interviewee discusses the positive sustainability assortative
matching process between the audit firm and clients.
If you have a business goal to put out a report on sustainability. ‘So,
these are the steps I’ve taken to get to net zero as a company.’ I need
an independent objective party like [the audit firm] to come in and
issue a report on that. Okay, we can do that for you because we have
the knowledge, the expertise to do it. (P1)
Sustainability developments, such as the Corporate Sustainability
Reporting Directive (CSRD), also present opportunities to educate about
broad regulatory considerations.
We have services that clients may not know and might need. So, we
point them towards service pages or web pages just to help people
understand the role that [the audit firm] can play in helping them …
For some folks, they’re not as far along on their sustainability
journey, so they need to be connected to the right resources. (P3)
Another interviewee succinctly stated that the hope is that their firm
is eminent.
We’re prominent in our point of view, and consistent and bring a
perspective, and that then further increases the likelihood that all of
our clients will want us to tailor that point of view to them, and then
that gets into, as you all know, there’s a set of permissible services
from an independence perspective that we can deliver to audit cli­
ents. So, there’s a lot we can do with our audit clients in this whole
ESG sustainability space, and even more broadly. We just always
of preserve the ability to influence and drive trust with stakeholders,
and importantly, our clients through that awareness. And then the
next step is the company would determine ‘is that something that
could be a value to us’ and then how? (P2)
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 1
Accounting Firm Use of Twitter
Panel A presents demographic information about each of the communication specialists who we posed open-ended questions about Twitter use. Semi-structured
interviews were conducted by Zoom, Microsoft Teams, phone, and email between January 2023 and February 2023. 11 semi-structured interviews were conduct­
ed with participants at 9 accounting firms. Interviews conducted by Zoom, Microsoft Teams, and phone were recorded so that the conversations could be transcribed
verbatim. On average, interviews lasted approximately 25 min (standard deviation of 7.41 min). Email response length is similar to the interview transcription length.
A follow-up Zoom call (16 min) and follow-up emails were used to source additional clarifying information. Demographic information was obtained from public
sources and participants. Participant 1 did not share their total years of experience. However, the participant is at the partner level. Firm 4 does not provide audit
services. However, the accounting firm serves a variety of clients and could similarly face alignment with clients along commonalities. As such, we believe that this firm
can provide novel insight into Twitter use and the tweeting process. Panel B presents themes originating from the interviews across Twitter use, tweeting process,
effectiveness, tweet frequency, and topical areas. One of the coauthors identified the representative themes. This coauthor, along with another coauthor, then
independently coded pertinent text from the interview transcripts into each theme. The mean kappa is 0.86, indicating high agreement between the two coders (Landis
& Koch, 1977). All coding differences were subsequently reconciled.
Panel A. Participant Demographics and Accounting Firm Size

Firm Participant Identifier (P) Participant Current Position Years of Experience Firm Size Interview Method

1 P1 Chief Risk Officer - Global Zoom (33 min)

1 P2 Sustainability Leader 26 Global Zoom (30 min)
1 P3 Senior Manager Public Relations 16 Global Zoom (26 min)
2 P4 Senior Director 9 Global Zoom (26 min)
3 P5 Senior Consultant 6 Global Phone (14 min)
4 P6 Senior Manager Public Relations 14 Global Zoom (17 min)
5 P7 Senior Marketing Manager 15 International Email and Follow-up Zoom (16 min)
6 P8 Content Marketing Specialist 2 National Email
7 P9 Marketing Director 4 Regional Email
8 P10 Marketing Director 17 Regional Zoom (22 min)
9 P11 Senior Digital Media Strategist 14 Regional Microsoft Teams (35 min)

Panel B. Themes

Reasons Participants who mentioned this reason Total

Twitter Use
Thought leadership and expertise P1, P2, P3, P4, P5, P6, P7, P8, P9, P10, P11 11 of 11
Branding P4, P6, P9, P10, P11 5 of 11
Credibility P2, P3, P4, P8, P10 5 of 11
Tweeting Process
Who writes and edits tweets?
Social media strategist P7, P11 2 of 11
Marketing or communication departments P1, P2, P3, P4, P5, P6, P8, P9, P10, P11 10 of 11
Approval needed before posting P1, P2, P3, P4, P5, P6, P7, P8, P10, P11 10 of 11
Risk and quality reviews P1, P2, P3, P4, P5, P6, P10 7 of 11
Audit partner involvement
Partners do not create tweets P1, P2, P3, P4, P5, P6, P7, P8, P9, P10, P11 11 of 11
Involved in review of content being posted P1, P2, P3, P4, P5, P7, P11 7 of 11
Effectiveness
Clickthrough rate P1, P2, P3, P4, P5, P7, P10 7 of 11
Impressions (e.g., like, shares, retweets, messages) P1, P2, P3, P4, P5, P6, P7, P8, P10 9 of 11
New business P1, P2, P3, P4, P6, P8, P10, P11 8 of 11
Tweeting Frequency
Volume of insights P1, P2, P3, P4, P5, P6, P7, P8, P9, P10, P11 11 of 11
Firm initiatives P1, P2, P3, P4, P5, P6, P7, P10 8 of 11
Topical Areas
Evergreen topics P1, P2, P3, P4, P5, P6, P7, P8, P10 9 of 11
Rapid reaction topics P1, P2, P3, P4, P6, P7, P8, P9, P10, P11 10 of 11
Campaigns P1, P2, P3, P4, P5, P6, P7, P10, P11 9 of 11

Accounting firm tweets are written, edited, and posted from mar­
keting or communication departments. Tweets are not created by indi­
vidual audit partners and “professional audit staff is not typically
involved in [the] tweeting process” (P9). Specifically, a “centralized
function within marketing” (P3) crafts tweets based off of “a white paper
or a newsletter or an alert, or something that one of our experts has
written” (P6). After tweets are written, they go through content and
technical internal review processes for approval. “There is someone on
the ground who’s writing the posts and then someone who’s reviewing
and approving and then actually another team that’s probably submit­
ting it” (P5).
As audit firm accounts are managed centrally, one participant noted
that tweets go through levels of quality review where “people check the
content of it is factually accurate” and risk review where “are they
saying something that somehow, some way potentially conflicts with
another position the [audit] firm has taken elsewhere” (P1). While audit
partners do not craft the tweets, they are sometimes included in the
quality or risk review process as subject matter experts. An interviewee
noted that within their firm:
Normally we’ll have like a partner or champion on whatever
campaign it is, we’ll make sure that they see it. We make sure that
legal sees it. We make sure that risk and quality control sees it
because there are for at least us on the regulated side, ramifications.
So, we want to make sure that it is being said and or positioned
correctly in a way that the comms person who is not an auditor may
make an error on, so that’s our control that we have on our end to
make sure that that’s all appropriate. (P4)
Depending on “the nature of the tweet” (P7), effectiveness is
captured in a variety of ways from clickthrough rates, impressions (e.g.,
likes, retweets, shares, messages), and new business. Some tweets are
intended to drive traffic to cross-function web pages, which can be
judged on clickthrough rates, while other tweets include information,
graphics, or videos, which can be judged through impressions. “You can

7
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 2
Sample selection.
Panel A: Sample Selection Process

Filters Firm-Year Observations

Number of firm-years covered by COMPUSTAT from 2012 to 2020 103,233
Less: Observations not covered by Audit Analytics PCAOB annually inspected audit firms (65,735)
Observations not covered by CRSP to have annual return, institutional ownership, and analyst following information (5155)
Observations with missing data to calculate dependent variables, independent variables, and control variables used in regression analyses (22,755)
Number of firm-years in the final sample for disclosure analysis 9588
Less: Observations with missing data to calculate dependent variables from Sustainalytics (3937)
Number of firm-years in the final sample for activities analysis 5651

Panel B: Sample Distribution by Year

Year Firm-Year Observations for Disclosure Analysis Percent (%) Firm-Year Observations for Activities Analysis Percent (%)

2012 582 6.07 713 12.62

2013 859 8.96 720 12.74
2014 1257 13.11 713 12.62
2015 1379 14.38 710 12.56
2016 1160 12.10 705 12.48
2017 1095 11.42 752 13.31
2018 1406 14.66 672 11.89
2019 1515 15.80 666 11.79
2020 335 3.49 0 0

Total 9588 100 5651 100

Panel C: Sample Distribution by Fama-French 48 Industry

Industry Firm-Year Observations for Disclosure Percent (%) Firm-Year Observations for Activities Percent (%)
Analysis Analysis

Agriculture 18 0.19 14 0.25

Food Products 188 1.96 143 2.53
Candy & Soda 21 0.22 17 0.30
Beer & Liquor 44 0.46 32 0.57
Tobacco Products 15 0.16 16 0.28
Recreation 56 0.58 21 0.37
Entertainment 143 1.49 75 1.33
Printing and Publishing 75 0.78 31 0.55
Consumer Goods 138 1.44 102 1.80
Apparel 131 1.37 80 1.42
Healthcare 175 1.83 90 1.59
Medical Equipment 349 3.64 129 2.28
Pharmaceutical Products 968 10.10 242 4.28
Chemicals 280 2.92 185 3.27
Rubber and Plastic Products 78 0.81 31 0.55
Textiles 20 0.21 8 0.14
Construction Materials 204 2.13 106 1.88
Construction 100 1.04 38 0.67
Steel Works Etc 124 1.29 65 1.15
Fabricated Products 25 0.26 0 0.00
Machinery 377 3.93 262 4.64
Electrical Equipment 127 1.32 47 0.83
Automobiles and Trucks 184 1.92 105 1.86
Aircraft 72 0.75 62 1.10
Shipbuilding, Railroad Equipment 23 0.24 11 0.19
Defense 28 0.29 13 0.23
Precious Metals 11 0.11 8 0.14
Non-Metallic and Industrial Metal Mining 29 0.30 43 0.76
Coal 18 0.19 17 0.30
Petroleum and Natural Gas 289 3.01 371 6.57
Utilities 297 3.10 380 6.72
Communication 309 3.22 183 3.24
Personal Services 119 1.24 78 1.38
Business Services 1407 14.67 671 11.87
Computers 298 3.11 195 3.45
Electronic Equipment 556 5.80 315 5.57
Measuring and Control Equipment 224 2.34 140 2.48
Business Supplies 107 1.12 58 1.03
Shipping Containers 54 0.56 59 1.04
Transportation 275 2.87 180 3.19
Wholesale 352 3.67 193 3.42
Retail 684 7.13 413 7.31
Restaurants, Hotels, Motels 206 2.15 96 1.70
Banking 30 0.31 18 0.32
Insurance 83 0.87 74 1.31
Real Estate 44 0.46 28 0.50
Trading 144 1.50 127 2.25
(continued on next page)

8
M. Liu et al.
Table 2 (continued )
Panel C: Sample Distribution by Fama-French 48 Industry
Industry Firm-Year Observations for Disclosure
Analysis
Other 89
Total 9588
understand how long the people stay on it. How much did they click
through? So, we can really start to look at themes between topics, maybe
even themes within how the tweet was structured” (P4). Interacting with
a tweet could generate engagement “that could translate into a com­
mercial opportunity” (P2). However, while the expectation is to create
client relationships that drive business, Twitter can be a “longer sales
funnel” (P6) where multiple steps are needed to drive new business “so
the more that we can be meeting them along that journey, I think the
better it is for us from a sales perspective” (P3). “Ultimately, you’re
getting people to review your content to understand your perspectives
and expertise in the space, so that clients come and want to talk to you
about an engagement with them” (P1).
Tweet topical areas and tweeting frequency also depend on “the
volume of insights we have and what firm initiatives are happening”
(P7). Topics tweeted about tend to span three categories: evergreen,
rapid reaction, and campaigns. Evergreen topics include “content that
we know we can just keep having, going, and cycling because it’s
important to our brand, and it’s never going to get outdated” (P4) that
“no matter what it’s still going to be relevant” (P10). These topics help
share expertise and insights, raising awareness rather than stating ca­
pabilities. Rapid reaction topics include “things that are top of mind for
people who are looking to consume information” (P4) such as elections,
breaking news, legislative changes, and market interventions. Cam­
paigns reflect firm initiatives where there is “work with the different
business units” (P4), such as when there are new service offerings. Given
rapid reactions, tweets are often intentionally spaced apart.
Part of it is just sort of right sizing the volume that [the audit firm’s]
putting out because we want to be obviously heard in the market. But
we don’t want to be overextending ourselves and people getting a
little bit tired of hearing too much from us. (P3)
We also present several sustainability tweets tailored for each
participating firm selected by the authors as “exemplar” tweets and pose
the following open-ended questions for each tweet: (1) What triggered the
tweet? (2) What is the objective of the tweet? (3) How does the audit firm
communicate/enhance their credibility in the sustainability area? While not
all interviewees wanted or were able to comment on specific tweets,
either due to not creating the tweet or because of firm policy, approxi­
mately half did. One interviewee noted that a tweet with a link to a
partner-created thought leadership document on charitable reporting
was intended “to keep our audience informed of changes that may
impact them” (P8). Likewise, a tweet can promote sustainability services
where a firm does “research and identify opportunities for us to be
involved in that space. It’s really important for us that we don’t do it just
to do it, just to say that we do it if it’s not a fit” (P11). Other tweets deal
with significant pieces of intellectual property that communication de­
partments leverage as a “traffic topic,” where the tweets are a “sounding
board to get you to drive through to this piece of thought leadership”
(P4).
Sustainability tweets posted by a participant’s global organization
are “based on our global sustainability strategy” and identify new ser­
vice offerings or initiatives that are not “country specific, because
there’s a lot of inconsistency from country to country in terms of sus­
tainability standards, regulations, policies” (P1). However, even from
other accounts, there is an intention to educate the market “that if you’re
doing business outside of the US, there are sustainability regulations that
you need to be paying attention to today, not what’s just forthcoming
9
Accounting, Organizations and Society xxx (xxxx) xxx
Percent (%) Firm-Year Observations for Activities Percent (%)
Analysis
0.93 79 1.40
100 5651 100
with the SEC” and “let people know that we have this offering, and that
they can connect with us” (P3). Social media also provides the oppor­
tunity to reach many clients at once.
We have lots and lots and lots of clients, and to do hand-to-hand
combat, if you will, making sure each partner is equipped with
this, and taking that message to our clients on an individual-by-
individual basis. This idea of one-to-many. We can get a point of
view out there to a broad audience and that naturally needs to be
reinforced and amplified and cascaded across our practice and
through our direct engagement with our clients. But these are really
important developments that are going to impact our clients, and
ultimately will impact us as the auditor or an advisor. (P2)
In turn, clients can become aware of sustainability matters in a
timelier manner.
Collectively, our interview evidence indicates that tweets are care­
fully drafted by firms’ communication departments and that individual
audit partners are not involved in the tweet creation process except as
subject matter experts in the quality and risk review process. Auditor
tweets demonstrate thought leadership, expertise, and credibility across
topical areas. As sustainability tweets can be used not only to educate
the market on sustainability developments but to also increase service
offering awareness, with the ultimate goal being the attainment of
additional business, they represent a reasonable measure of auditor
sustainability focus.
3.3. Auditor sustainability focus
We utilize the Twitter Academic Developer API (Application Pro­
gramming Interface) for Academic Research to collect the tweets and
public metric information from audit firms’ official Twitter accounts for
ten years starting in 2011. For each auditor, we identify one to six
official Twitter accounts. If a tweet and a retweet have exactly the same
content and are posted at around the same time, we treat the tweets as
duplicate information and only keep the original tweet. After removing
duplicate information, we have 344,724 total tweets from 2011 to 2020.
Appendix A provides additional information.
We then use the keyword matching method to calculate the total
sustainability words (Anand, Bochkay, Chychyla, & Leone, 2020),
including four different categories (business practice, product, philan­
thropy, and general), for each tweet. Before matching the words, we
prepare and clean the tweets by making them case-insensitive and
removing all URLs, email addresses, mentions, and punctuation marks.
Next, we use the word dictionary from Cannon, Ling, Wang, and
Watanabe (2020) located in Appendix B to capture the presence of
sustainability information in each tweet. Among all tweets, 5707 tweets
contain at least one sustainability word. Finally, we calculate the total
sustainability word count in each tweet for each category and aggregate
the total sustainability word count across the four categories. We
calculate AUD_RATIO as the ratio of sustainability words to the total
word count from each auditor’s Twitter accounts for each client’s fiscal
 M. Liu et al.
Table 3
Descriptive Statistics
This table summarizes the descriptive statistics for variables in the main analyses. All variables are defined in Appendix C. Panels A and B provides summary statistics for the hypothesis. Panel C presents Pairwise
correlation coefficients. *p < 0.1, **p < 0.05, ***p < 0.01 (two-tailed tests).
Panel A: Summary Statistics for Sustainability Disclosure Analysis (N = 9588)

Mean Std. Dev Min P25 P50 P75 Max

1A_RATIOt 0.083 0.131 0.000 0.000 0.029 0.115 1.667

1A_RATIOt+1 0.078 0.127 0.000 0.000 0.020 0.104 1.213
1A_RATIOt+2 0.074 0.125 0.000 0.000 0.011 0.098 1.184
AUD_RATIO 0.105 0.048 0.000 0.073 0.097 0.126 0.579
AUD_RATIO_NLTK 0.172 0.074 0.000 0.128 0.162 0.208 0.857
AUD_RATIO_GHB 0.207 0.087 0.000 0.155 0.201 0.249 1.017
AUD_RATIO_TWEET 0.017 0.008 0.000 0.012 0.017 0.020 0.067
SIZE 7.283 1.842 2.349 6.008 7.296 8.497 12.388
MTB 4.028 8.203 − 34.822 1.434 2.566 4.756 66.409
LEVERAGE 0.274 0.229 0.000 0.084 0.250 0.401 1.230
ROA − 0.022 0.211 − 1.536 − 0.026 0.032 0.071 0.321
CASHFLOW 0.048 0.183 − 1.247 0.039 0.082 0.127 0.379
LIQ 0.236 0.230 − 0.507 0.064 0.196 0.370 0.937
LOSS 0.315 0.464 0.000 0.000 0.000 1.000 1.000
GM − 0.317 4.590 − 50.565 0.220 0.362 0.555 0.988
ANN_RET 0.159 0.575 − 0.839 − 0.167 0.076 0.344 8.083
ALTMANZ 0.981 0.760 − 1.393 0.492 0.811 1.265 10.241
RESTRUCTURE 0.427 0.495 0.000 0.000 0.000 1.000 1.000
IOR 0.713 0.280 0.000 0.573 0.799 0.916 1.211
NUM_ANALYSTS 1.972 0.910 0.000 1.386 2.079 2.708 3.526
LNAFEE 14.462 1.009 10.292 13.776 14.419 15.122 17.165
ICMW 0.045 0.206 0.000 0.000 0.000 0.000 1.000
10

RESTATE 0.079 0.269 0.000 0.000 0.000 0.000 1.000

Panel B: Summary Statistics for Sustainability Activities Analysis (N = 5651)

Mean Std. Dev Min P25 P50 P75 Max

AUD_RATIO 0.110 0.055 0.030 0.072 0.103 0.131 0.579

AUD_RATIO_NLTK 0.179 0.083 0.043 0.128 0.174 0.208 0.857
AUD_RATIO_GHB 0.215 0.098 0.051 0.155 0.214 0.249 1.017
AUD_RATIO_TWEET 0.017 0.007 0.004 0.012 0.017 0.020 0.067
ENV_SCOREt 53.112 12.797 23.710 42.830 51.000 61.467 97.000
ENV_SCOREt+1 53.587 12.810 23.710 43.083 51.700 62.000 100.000
ENV_SCOREt+2 54.066 12.780 23.710 43.935 52.273 62.667 100.000
SOC_SCOREt 54.808 10.239 33.010 47.000 53.548 61.500 90.689
SOC_SCOREt+1 55.036 10.299 33.010 47.000 53.883 61.740 90.689

Accounting, Organizations and Society xxx (xxxx) xxx

SOC_SCOREt+2 55.304 10.388 33.045 47.083 54.117 62.000 90.689
GOV_SCOREt 65.359 7.696 38.500 60.125 65.125 70.750 92.583
GOV_SCOREt+1 65.336 7.576 39.500 60.169 65.000 70.448 92.583
GOV_SCOREt+2 65.271 7.504 39.638 60.236 65.000 70.195 92.583
SIZE 8.940 1.279 2.349 8.049 8.815 9.762 12.334
MTB 4.360 8.217 − 34.822 1.701 2.965 5.206 54.575
LEVERAGE 0.308 0.199 0.000 0.175 0.292 0.410 1.230
ROA 0.046 0.107 − 1.389 0.021 0.052 0.091 0.321
CASHFLOW 0.105 0.083 − 1.042 0.067 0.099 0.144 0.379
LIQ 0.150 0.171 − 0.304 0.021 0.118 0.249 0.907
LOSS 0.154 0.361 0.000 0.000 0.000 0.000 1.000
GM 0.374 1.168 − 50.565 0.268 0.396 0.576 0.981
ANN_RET 0.132 0.409 − 0.839 − 0.091 0.098 0.300 4.003
ALTMANZ 0.909 0.688 − 0.209 0.457 0.715 1.142 7.005
RESTRUCTURE 0.511 0.500 0.000 0.000 1.000 1.000 1.000
(continued on next page)
 M. Liu et al.
Table 3 (continued )
Panel B: Summary Statistics for Sustainability Activities Analysis (N = 5651)

Mean Std. Dev Min P25 P50 P75 Max

IOR 0.781 0.234 0.000 0.708 0.843 0.930 1.211

NUM_ANALYSTS 2.562 0.799 0.000 2.303 2.773 3.091 3.526
LNAFEE 15.216 0.848 12.426 14.639 15.203 15.755 17.165
ICMW 0.030 0.170 0.000 0.000 0.000 0.000 1.000
RESTATE 0.082 0.275 0.000 0.000 0.000 0.000 1.000

Panel C: Pairwise Correlation Coefficients

Variables (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

(1) AUD_RATIO 1
(2) 1A_RATIOt 0.063*** 1
(3) 1A_RATIOt+1 0.125*** 0.843*** 1
(4) 1A_RATIOt+2 0.229*** 0.689*** 0.802*** 1
(5) GOV_SCOREt 0.092*** 0.146*** 0.138*** 0.093*** 1
(6) SOC_SCOREt 0.043** 0.123*** 0.138*** 0.136*** 0.408*** 1
(7) ENV_SCOREt − 0.036** − 0.059*** − 0.057*** − 0.061*** 0.265*** 0.559*** 1
(8) GOV_SCOREt+1 0.117*** 0.128*** 0.153*** 0.130*** 0.916*** 0.401*** 0.254*** 1
(9) SOC_SCOREt+1 0.050*** 0.121*** 0.124*** 0.133*** 0.384*** 0.939*** 0.534*** 0.417*** 1
(10) ENV_SCOREt+1 − 0.038** − 0.044** − 0.060*** − 0.065*** 0.245*** 0.541*** 0.962*** 0.260*** 0.548*** 1
(11) GOV_SCOREt+2 0.126*** 0.122*** 0.123*** 0.144*** 0.802*** 0.386*** 0.245*** 0.914*** 0.414*** 0.249*** 1
(12) SOC_SCOREt+2 0.037* 0.133*** 0.121*** 0.113*** 0.345*** 0.854*** 0.511*** 0.382*** 0.942*** 0.525*** 0.414***
(13) ENV_SCOREt+2 − 0.054** − 0.033* − 0.044** − 0.067*** 0.218*** 0.512*** 0.906*** 0.234*** 0.532*** 0.958*** 0.253***
(14) SIZE − 0.021** 0.124*** 0.119*** 0.114*** 0.126*** 0.299*** 0.428*** 0.139*** 0.312*** 0.430*** 0.153***
(15) MTB − 0.018* − 0.050*** − 0.042*** − 0.042*** − 0.029* − 0.057*** 0.017 − 0.023 − 0.059*** 0.023 − 0.040**
(16) LEVERAGE − 0.045*** 0.047*** 0.052*** 0.045*** 0.051*** − 0.015 0.008 0.061*** − 0.011 0.013 0.053***
11

(17) ROA 0.061*** 0.081*** 0.078*** 0.076*** 0.054*** 0.112*** 0.096*** 0.058*** 0.108*** 0.098*** 0.070***
(18) CASHFLOW 0.074*** 0.084*** 0.086*** 0.087*** 0.018 0.102*** 0.049*** 0.008 0.089*** 0.043** 0.014
(19) LIQ − 0.015 − 0.137*** − 0.139*** − 0.134*** − 0.168*** − 0.121*** − 0.063*** − 0.185*** − 0.123*** − 0.045** − 0.186***
(20) LOSS − 0.039*** − 0.107*** − 0.100*** − 0.099*** − 0.079*** − 0.143*** − 0.103*** − 0.088*** − 0.148*** − 0.103*** − 0.105***
(21) GM 0.066*** 0.038*** 0.039*** 0.041*** 0.041** 0.068*** 0.032* 0.046** 0.082*** 0.040** 0.064***
(22) ANN_RET 0.044*** − 0.013 0.006 − 0.042*** − 0.009 − 0.047*** − 0.015 − 0.014 − 0.032* − 0.011 − 0.077***
(23) ALTMANZ 0.043*** 0.029*** 0.031** 0.039*** 0.038** − 0.026 0.008 0.048*** − 0.037** 0.006 0.047**
(24) RESTRUCTURE − 0.006 − 0.022** − 0.035*** − 0.053*** 0.086*** 0.124*** 0.234*** 0.071*** 0.134*** 0.232*** 0.060***
(25) IOR − 0.051*** 0.050*** 0.01 − 0.016 0.040** − 0.095*** − 0.103*** − 0.008 − 0.129*** − 0.068*** − 0.03
(26) NUM_ANALYSTS − 0.014 0.018* 0.023* 0.016 − 0.044*** 0.052*** 0.212*** − 0.050*** 0.046** 0.216*** − 0.060***
(27) LNAFEE − 0.059*** 0.026** 0.015 0.018 0.078*** 0.278*** 0.470*** 0.092*** 0.292*** 0.471*** 0.108***
(28) ICMW − 0.011 − 0.020* − 0.007 − 0.008 − 0.006 − 0.023 − 0.01 − 0.015 − 0.029 − 0.016 − 0.019
(29) RESTATE 0.038*** 0.020** 0.027** 0.021 0.043** 0.009 0.007 0.040** 0.027 0.013 0.031

Variables (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22)

Accounting, Organizations and Society xxx (xxxx) xxx

(12) SOC_SCOREt+2 1
(13) ENV_SCOREt+2 0.542*** 1
(14) SIZE 0.319*** 0.428*** 1
(15) MTB − 0.084*** 0.028 0.021** 1
(16) LEVERAGE − 0.022 0.009 0.277*** − 0.041*** 1
(17) ROA 0.122*** 0.080*** 0.448*** 0.020** − 0.034*** 1
(18) CASHFLOW 0.094*** 0.031 0.419*** 0.031*** − 0.020** 0.872*** 1
(19) LIQ − 0.118*** − 0.027 − 0.469*** 0.049*** − 0.407*** − 0.249*** − 0.305*** 1
(20) LOSS − 0.154*** − 0.097*** − 0.395*** 0.019* 0.015 − 0.635*** − 0.507*** 0.225*** 1
(21) GM 0.094*** 0.037* 0.214*** 0.009 0.073*** 0.458*** 0.467*** − 0.280*** − 0.231*** 1
(22) ANN_RET − 0.049** − 0.008 − 0.039*** 0.151*** − 0.052*** 0.048*** 0.033*** 0.081*** − 0.029*** − 0.012 1
(23) ALTMANZ − 0.055*** − 0.010 − 0.058*** − 0.009 − 0.123*** 0.279*** 0.293*** − 0.029*** − 0.185*** 0.175*** − 0.030***
(24) RESTRUCTURE 0.143*** 0.240*** 0.228*** − 0.064*** 0.125*** 0.084*** 0.085*** − 0.154*** − 0.034*** 0.091*** − 0.084***
(25) IOR − 0.139*** − 0.061*** 0.308*** 0.048*** 0.043*** 0.260*** 0.253*** − 0.067*** − 0.190*** 0.083*** 0.020*
(continued on next page)
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 4

− 0.038***
− 0.036***

0.128***
Item 1A Sustainability Disclosures

− 0.002
This table examines the relationship between auditor sustainability focus

(28)
0.014
(22)
(AUD_RATIO) and the relative inclusion of clients’ Item 1A sustainability dis­

1
closures (1A_RATIO). All variables are defined in Appendix C. The standard error
is clustered at the industry level. t-statistics are presented in parentheses. *p <
0.043*** 0.1, **p < 0.05, ***p < 0.01 (two-tailed tests).
0.184***
0.020**
0.023**
(1) (2) (3)
(21)

1A_RATIOt 1A_RATIOt+1 1A_RATIOt+2

AUD_RATIO 0.1321*** 0.3063*** 0.5297***

(3.19) (5.02) (6.19)

0.061***
0.047***
SIZE − 0.0224** − 0.0067 0.0104
− 0.172***
− 0.264***
0.054***

(27)

(-2.30) (-0.70) (0.87)

− 0.002

1
MTB 0.0000 0.0000 0.0000
(20)

(0.17) (0.01) (0.07)

LEVERAGE − 0.0695*** − 0.0555*** − 0.0382**
(-3.04) (-3.08) (-2.51)
ROA − 0.0091 − 0.0490* − 0.0509*
0.146***
0.367***

0.038***

(-0.76) (-1.92) (-1.94)

0.021**

CASHFLOW − 0.0101 0.0306* 0.0423*

(19)

(-0.66) (1.91) (1.67)

LIQ 0.0083 0.0132 0.0295
−
−
−
−

(0.65) (0.97) (1.54)

− 0.043***
− 0.026***
0.493***

LOSS 0.0011 0.0002 − 0.0059

(0.20) (0.07) (-1.06)
(26)
0.191***
0.277***

GM 0.0002 0.0005*** − 0.0003***

1
− 0.013
0.007

(1.39) (2.84) (-2.67)

(18)

ANN_RET 0.0060** 0.0054 − 0.0048

(2.65) (1.59) (-1.44)
ALTMANZ 0.0097 0.0101 0.0314***
(1.19) (1.54) (3.57)
RESTRUCTURE − 0.0054 − 0.0064 − 0.0088*
− 0.024**
0.180***
0.307***

(-1.56) (-1.51) (-1.93)

0.007
(17)

IOR 0.0902*** 0.0329** − 0.0118

(7.39) (2.41) (-1.01)
0.365***
0.273***

− 0.002

NUM_ANALYSTS 0.0024 0.0035 − 0.0004

0.018*
(25)

(0.33) (0.56) (-0.05)

1

LNAFEE − 0.0373*** − 0.0496*** − 0.0423***

0.098***
0.243***

0.043***

(-5.53) (-5.55) (-4.59)

0.023**

ICMW − 0.0012 0.0044 0.0065

(16)

(-0.23) (0.95) (0.75)

RESTATE 0.0134*** 0.0160*** 0.0103***
(4.02) (4.38) (3.46)

N 9588 8709 7459

0.150***
0.034***

R2 0.099 0.095 0.152

− 0.019*
− 0.016

Year Fixed Y Y Y
(15)

0.093***
0.065***
0.340***
0.044***
0.054***

Firm Fixed Y Y Y
Auditor Fixed Y Y Y
(24)

Cluster Industry Y Y Y
1
− 0.032***
0.573***
0.850***

year t. We use each client’s fiscal year to match the extent of available
0.011

auditor Twitter communications to financial reporting disclosures.9

(14)

That is, we use rolling years of auditor Twitter communications for each
client.
0.218***
0.473***

4. Research design
− 0.067***
− 0.036***
0.018
0.012

0.023**

− 0.009
− 0.013
(13)

0.004
(23)

4.1. Empirical design

1

We utilize the following model to investigate our hypothesis:

0.304***
0.045**

− 0.007
0.036*

REPORTit+n = β0 + β1AUD_RATIOit + β2SIZEit + β3MTBit + β4LEVER­

(12)

AGEit + β5ROAit + β6CASHFLOWit + β7LIQit + β8LOSSit + β9GMit +

β10ANN_RETit + β11ALTMANZit + β12-14EXTERNALit + β15-18AUDITit +
∑ ∑ ∑
FIRM + YEAR + AUDITOR + ε (1)
NUM_ANALYSTS

NUM_ANALYSTS
RESTRUCTURE
Table 3 (continued )

ALTMANZ
RESTATE

RESTATE
LNAFEE

LNAFEE

9
ICMW

ICMW

As tweet timing is key in our setting, we use precise fiscal years for each
Variables

Variables

IOR

client. However, we alternatively examine whether our results are robust to

(26)
(27)
(28)
(29)

(23)
(24)
(25)
(26)
(27)
(28)
(29)

matching calendar year auditor tweets to client’s sustainability disclosures and

activities and find qualitatively similar results.

12
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 5
Sustainability Activities
This table examines the relationship between auditor sustainability focus (AUD_RATIO) and client sustainability activities (ENV_SCORE, SOC_SCORE, and GOV_­
SCORE). All variables are defined in Appendix C. The standard error is clustered at the industry level. t-statistics are presented in parentheses. *p < 0.1, **p < 0.05,
***p < 0.01 (two-tailed tests).
Panel A: Environmental Activities

(1) (2) (3)

ENV_SCOREt ENV_SCOREt+1 ENV_SCOREt+2

AUD_RATIO − 1.5595 − 1.2756 − 3.4620

(-0.60) (-0.66) (-1.49)
SIZE − 0.1417 0.3735 1.1076***
(-0.11) (0.33) (2.67)
MTB 0.0100 − 0.0092 − 0.0081
(0.84) (-0.80) (-0.73)
LEVERAGE 1.1594 1.1194 0.7603
(0.92) (0.78) (0.74)
ROA − 1.1259 − 1.5721* − 2.6973**
(-0.92) (-1.69) (-2.01)
CASHFLOW 0.1202 0.6998 2.3855
(0.06) (0.35) (1.22)
LIQ 0.9150 1.9018 1.5693
(0.59) (1.27) (1.31)
LOSS 0.3056 0.7229** 0.5808*
(1.10) (2.64) (1.82)
GM − 0.0888*** − 0.0323 0.0603
(-3.90) (-1.44) (0.74)
ANN_RET 0.5276 0.2212 − 0.0478
(1.48) (0.77) (-0.26)
ALTMANZ 0.5326 0.6103 0.6748
(0.82) (0.85) (1.28)
RESTRUCTURE 0.0839 0.1473 0.1096
(0.31) (0.65) (0.50)
IOR − 0.3408 − 1.3186 − 1.0662
(-0.49) (-1.38) (-1.51)
NUM_ANALYSTS 0.4294* 0.2335 0.4054*
(1.94) (0.81) (1.92)
LNAFEE 1.0046 0.9057 0.4076
(1.57) (1.47) (0.90)
ICMW − 0.0159 − 0.0900 0.4897
(-0.04) (-0.27) (0.95)
RESTATE − 0.1887 − 0.0361 − 0.0126
(-0.78) (-0.11) (-0.05)

N 5651 5059 4408

R2 0.075 0.073 0.072
Year Fixed Y Y Y
Firm Fixed Y Y Y
Auditor Fixed Y Y Y
Cluster Industry Y Y Y

Panel B: Social Activities

(1) (2) (3)

SOC_SCOREt SOC_SCOREt+1 SOC _SCOREt+2

AUD_RATIO 1.1239 3.8683* 8.0805***

(0.55) (1.82) (2.86)
SIZE 0.1600 0.2804 0.6952
(0.28) (0.47) (1.12)
MTB − 0.0016 − 0.0076 − 0.0186**
(-0.15) (-0.77) (-2.07)
LEVERAGE 1.4312 0.5514 0.0272
(1.28) (0.61) (0.03)
ROA 0.3395 1.2702 1.1518
(0.33) (1.37) (1.55)
CASHFLOW 1.5612 − 2.6505 − 3.7124**
(0.87) (-1.15) (-2.03)
LIQ 0.0478 0.9429 − 0.5972
(0.04) (0.65) (-0.53)
LOSS 0.3663* 0.3703 0.1273
(1.74) (1.63) (0.44)
GM − 0.1090*** − 0.0909** 0.0621***
(-3.26) (-2.55) (2.93)
ANN_RET 0.0603 0.3716* 0.5660***
(0.31) (1.91) (2.88)
ALTMANZ 1.1707** 1.1702** 0.6830
(2.62) (2.08) (0.93)
(continued on next page)

13
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 5 (continued )
Panel B: Social Activities

(1) (2) (3)

SOC_SCOREt SOC_SCOREt+1 SOC _SCOREt+2

RESTRUCTURE − 0.0867 − 0.1308 − 0.1017

(-0.44) (-0.65) (-0.42)
IOR 0.7743 − 0.8984 − 1.2678*
(1.30) (-1.18) (-1.77)
NUM_ANALYSTS 0.1101 − 0.1981 − 0.3843
(0.42) (-0.78) (-1.59)
LNAFEE 0.1777 − 0.1567 − 1.0236*
(0.36) (-0.33) (-1.91)
ICMW 0.0484 − 0.4664 − 0.2283
(0.11) (-1.02) (-0.54)
RESTATE 0.0361 0.0745 0.0236
(0.14) (0.37) (0.09)

N 5651 5059 4408

R2 0.005 0.010 0.030
Year Fixed Y Y Y
Firm Fixed Y Y Y
Auditor Fixed Y Y Y
Cluster Industry Y Y Y

Panel C: Governance Activities

(1) (2) (3)

GOV_SCOREt GOV_SCOREt+1 GOV_SCOREt+2

AUD_RATIO 4.3931** 6.8078*** 11.7557***

(2.43) (4.08) (5.81)
SIZE − 1.8236*** − 1.9505*** − 1.4097***
(-3.13) (-3.32) (-2.66)
MTB 0.0050 − 0.0034 − 0.0073
(0.50) (-0.42) (-0.65)
LEVERAGE − 2.3670*** − 2.5917*** − 3.5634***
(-2.83) (-3.14) (-3.65)
ROA − 2.1268** − 0.7461 0.6965
(-2.58) (-1.08) (0.81)
CASHFLOW − 3.7096 − 3.3578 − 4.4884**
(-1.63) (-1.44) (-2.16)
LIQ 2.4796** 2.1596** 3.0891***
(2.27) (2.39) (3.26)
LOSS − 0.0857 0.1730 − 0.0784
(-0.27) (0.51) (-0.23)
GM − 0.0055 − 0.0122 0.1000***
(-0.30) (-0.56) (7.85)
ANN_RET 0.3950** 0.1249 − 0.1202
(2.33) (0.55) (-0.60)
ALTMANZ − 0.4976 − 0.4270 0.4333
(-0.98) (-0.81) (0.79)
RESTRUCTURE 0.1950 0.1336 0.1079
(0.77) (0.62) (0.70)
IOR 1.2589*** − 0.7523 − 1.1368*
(3.03) (-1.06) (-1.75)
NUM_ANALYSTS 0.2746 0.1419 0.0427
(1.33) (0.72) (0.23)
LNAFEE 0.2523 0.1121 0.0759
(0.62) (0.29) (0.21)
ICMW 0.1787 − 0.0967 − 0.0495
(0.53) (-0.35) (-0.15)
RESTATE 0.1000 0.0162 0.2630
(0.41) (0.06) (1.29)

N 5651 5059 4408

R2 0.045 0.053 0.090
Year Fixed Y Y Y
Firm Fixed Y Y Y
Auditor Fixed Y Y Y
Cluster Industry Y Y Y

We use two measures to capture sustainability reporting (REPORT):
Item 1A disclosures (1A_RATIO) and sustainability activities. Both
measures reflect sustainability disclosures as well as activities shown in
a firm’s sustainability reporting. All continuous variables are winsorized
at the 1 and 99 percentile levels. Year, firm, and auditor fixed effects are
included. The standard error is clustered by industry. Appendix C
provides variable definitions.
Using the same data cleaning process and sustainability keyword
matching analysis previously mentioned (Cannon et al., 2020),
1A_RATIO is the extent of sustainability words scaled by the total word
count in clients’ 10-K filing Item 1A risk factor disclosures in a given
year. We remove stop words using the NLTK (Natural Language Toolkit)

14
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 6
Alternative Measures
This table examines the relationship between auditor sustainability focus (AUD_RATIO) and client sustainability disclosures and after stop word removal and tweet
level characterization. All variables are defined in Appendix C. The standard error is clustered at the industry level. t-statistics are presented in parentheses. *p < 0.1,
**p < 0.05, ***p < 0.01 (two-tailed tests).
Panel A: Sustainability Disclosures (Dependent Measure: 1A_RATIOt+1)

(1) (2) (3)

AUD_RATIO_NLTK 0.1681***
(4.66)
AUD_RATIO_GHB 0.1693***
(4.69)
AUD_RATIO_TWEET 0.6809**
(2.34)
SIZE − 0.0077 − 0.0096 − 0.0098
(-0.78) (-0.81) (-0.93)
MTB − 0.0000 − 0.0000 − 0.0000
(-0.06) (-0.08) (-0.23)
LEVERAGE − 0.0584*** − 0.0702*** − 0.0644***
(-3.17) (-3.17) (-3.28)
ROA − 0.0486* − 0.0582* − 0.0472*
(-1.87) (-1.87) (-1.74)
CASHFLOW 0.0304* 0.0366* 0.0312*
(1.90) (1.90) (1.91)
LIQ 0.0140 0.0171 0.0157
(1.03) (1.05) (1.13)
LOSS 0.0002 0.0003 0.0005
(0.07) (0.07) (0.15)
GM 0.0005*** 0.0006*** 0.0005***
(2.91) (2.91) (2.98)
ANN_RET 0.0056 0.0067 0.0059*
(1.64) (1.63) (1.75)
ALTMANZ 0.0098 0.0117 0.0087
(1.47) (1.47) (1.27)
RESTRUCTURE − 0.0066 − 0.0079 − 0.0069
(-1.56) (-1.57) (-1.67)
IOR 0.0318** 0.0384** 0.0265*
(2.29) (2.30) (1.88)
NUM_ANALYSTS 0.0039 0.0049 0.0048
(0.62) (0.65) (0.76)
LNAFEE − 0.0528*** − 0.0636*** − 0.0612***
(-5.61) (-5.62) (-5.72)
ICMW 0.0045 0.0056 0.0045
(0.96) (0.99) (0.95)
RESTATE 0.0165*** 0.0198*** 0.0173***
(4.46) (4.47) (4.65)

N 8709 8709 8709

R2 0.088 0.089 0.075
Year Fixed Y Y Y
Firm Fixed Y Y Y
Auditor Fixed Y Y Y
Cluster Industry Y Y Y

Panel B: Sustainability Activities (Environmental Activities: ENV_SCOREt+1)

(1) (2) (3)

AUD_RATIO_NLTK − 1.1078
(-1.05)
AUD_RATIO_GHB − 0.8586
(-0.96)
AUD_RATIO_TWEET − 3.7657
(-0.25)

N 5059 5059 5059

R2 0.073 0.073 0.073
Control Variables Y Y Y
Year, Firm, and Auditor Fixed Y Y Y
Cluster Industry Y Y Y

Panel C: Sustainability Activities (Social Activities: SOC_SCOREt+1)

(1) (2) (3)

AUD_RATIO_NLTK 2.1367
(1.62)
AUD_RATIO_GHB 1.9024*
(1.69)
AUD_RATIO_TWEET 34.8782**
(2.24)

(continued on next page)

15
M. Liu et al.
Table 6 (continued )
Panel C: Sustainability Activities (Social Activities: SOC_SCOREt+1)
(1)
N 5059
R2 0.010
Control Variables Y Y
Year, Firm, and Auditor Fixed Y Y
Cluster Industry Y Y
Panel D: Sustainability Activities (Governance Activities: GOV_SCOREt+1)
(1)
AUD_RATIO_NLTK 4.0038***
(3.88)
AUD_RATIO_GHB
AUD_RATIO_TWEET
N 5059
R2 0.051
Control Variables Y Y
Year, Firm, and Auditor Fixed Y Y
Cluster Industry Y Y
dictionary. As there could be a lag between auditor sustainability focus
(AUD_RATIO) and clients’ Item 1A disclosures we examine disclosures in
t, t+1, and t+2.
We use three categories of sustainability scores reported by Sustai­
nalytics, environmental (ENV_SCORE), social (SOC_SCORE), and gover­
nance (GOV_SCORE), to capture client sustainability activities.10 Beyond
Item 1A disclosures provided in the 10-K, Sustainalytics data reflects
actual firm activities that are identified, scored, and weighted. Each
measure reflects the average monthly historical weighted score for
environmental, social, and governance activities for each firm, with a
higher score reflecting greater sustainability activities. Environmental
activities include exposure to environment related risks such as climate,
pollution, waste, and ecological impact. Social activities include a firm’s
values and business relationships, fair labor practices, product quality
and safety, human capital, and diversity and inclusion practices (AICPA,
2021). Governance activities include the policies and processes sur­
rounding how a firm is controlled, board of director characteristics,
executive compensation, and corporate resiliency. We measure sus­
tainability activities in t, t+1, and t+2 as it could take firms some time to
adjust their sustainability activities.
As we examine the extent of sustainability disclosures and activities,
we include a variety of control variables. First, we control for firm size
(SIZE), as larger firms tend to provide greater voluntary disclosures,
10
It is important to note that voluntary sustainability reporting can occur
multiple ways. Berg, Kölbel, and Rigobon (2022) document disagreements be­
tween different sources of sustainability data, largely driven by measurement
and scope differences. While MSCI ESG KLD STATs provides an alternative
source of sustainability data, and is the most commonly used data to date, Berg
et al. (2022) note that this data is least correlated with all other sustainability
data sources. We find consistent results when using the sustainability
“strengths” and “weaknesses” provided by MSCI ESG KLD STATs as measures of
sustainability reporting. Specifically, we find that auditor sustainability focus is
positively associated with client sustainability strength activities in the current
(t = 6.52) and subsequent year (t = 2.89). That is, there are greater actions
undertaken by clients that positively affect the clients’ stakeholders including
shareholders, employees, customers, government, and suppliers, among others.
However, auditor sustainability focus is not significantly associated with sus­
tainability concerns in the current year. One possibility is that auditor-client
sustainability alignment initially focuses on existing sustainability guidance,
best practices, and opportunities to enhance intrafirm sustainability discus­
sions. These actions could enhance positive sustainability outcomes, while
taking time to mitigate sustainability concerns. Likewise, we note a negative
association with sustainability concerns in t+1 (t = − 3.24).
16
Accounting, Organizations and Society xxx (xxxx) xxx
(2) (3)
5059 5059
0.010 0.011
Y
Y
Y
(2) (3)
3.4182***
(3.90)
39.3951***
(3.63)
5059 5059
0.051 0.049
Y
Y
Y
including social disclosures (e.g., Brammer & Pavelin, 2004). Second,
we account for firm profitability through market-to-book ratio (MTB),
leverage (LEVERAGE), return on assets (ROA), and loss (LOSS) as prof­
itability can influence social disclosures and activities (Qiu, Shaukat, &
Tharyan, 2016). Third, we include other firm characteristics such as
operating cash flow (CASHFLOW), liquidity (LIQ), gross margin (GM),
annual return (ANN_RET), and bankruptcy risk (ALTMANZ) (e.g., Can­
non et al., 2020). Firms with greater cash flows and higher annual
returns could be more willing to disclose sustainability information or
engage in further sustainability related communications. Collectively,
these characteristics can reflect the pressures and incentives on firms to
report additional sustainability disclosures, which can have both
financial and nonfinancial risks.
We further include variables relating to external forces on sustain­
ability reporting. Specifically, we account for restructuring activity
(RESTRUCTURE) that can affect the quantity and quality of risk
reporting (e.g., Ott, 2020). We further control for the extent of institu­
tional ownership (IOR) and analyst following (NUM_ANALYSTS).
Greater external monitoring can put greater weight on corporate social
performance (e.g., Neubaum & Zahra, 2006). We similarly account for
audit quality characteristics that could affect the extent of client dis­
closures including audit fees (LNAFEE), internal control material
weaknesses (ICMW), and restatements (RESTATE). Clients with higher
audit quality can provide greater disclosures to their stakeholders (Yang,
Yu, Liu, & Wu, 2018), including additional sustainability information.
4.2. Sample
We use the Twitter Academic Developer API to access and download
tweets and public metric information for PCAOB annually inspected
auditors.11 We begin our Twitter process in 2011 due to the rapid
growth of Twitter and the initial establishment and use of official
auditor accounts. Our sample begins with 37,498 firm-year observations
from 2012 to 2020 where we can ascertain the identity of both the
auditor and the client. Our sample is then reduced by client firms with
Item 1A risk disclosures where we cannot parse the word choice.
Further, our sample is reduced by 5155 observations without CRSP in­
formation on annual returns, institutional ownership, and analyst
following and 22,755 observations without necessary information from
11
We thank Twitter for granting us access to the Academic Developer API. The
API enables us to access the full history of public conversations through the full-
archive search endpoint, unlike other public endpoints.
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 7
Auditor Characteristics
This table examines the relationship between auditor sustainability focus (AUD_RATIO) and the relative inclusion of clients’ Item 1A sustainability disclosures
(1A_RATIOt+1) and activities when auditor characteristics are considered (INDUSTRY_SPEC and BIG4). All variables are defined in Appendix C. The standard error is
clustered at the industry level. t-statistics are presented in parentheses. *p < 0.1, **p < 0.05, ***p < 0.01 (two-tailed tests).
Panel A: Sustainability Disclosures (Dependent Measure: 1A_RATIOt+1)

(1) (2) (3)

AUD_RATIO 0.2743*** 0.1183*** 0.1099**

(4.01) (2.66) (2.52)
INDUSTRY_SPEC − 0.0038 − 0.0012
(-0.23) (-0.07)
AUD_RATIO × INDUSTRY_SPEC 0.1878** 0.1605*
(2.29) (1.81)
BIG4 0.0731** 0.0769**
(2.20) (2.30)
AUD_RATIO × BIG4 0.2281*** 0.2048**
(2.99) (2.46)
SIZE − 0.0070 − 0.0065 − 0.0067
(-0.73) (-0.69) (-0.71)
MTB 0.0000 − 0.0000 0.0000
(0.10) (-0.02) (0.06)
LEVERAGE − 0.0554*** − 0.0553*** − 0.0553***
(-3.05) (-3.05) (-3.03)
ROA − 0.0487* − 0.0479* − 0.0478*
(-1.89) (-1.90) (-1.88)
CASHFLOW 0.0317* 0.0297* 0.0309*
(1.96) (1.84) (1.89)
LIQ 0.0129 0.0120 0.0119
(0.96) (0.92) (0.91)
LOSS 0.0000 0.0001 − 0.0000
(0.01) (0.04) (-0.01)
GM 0.0005*** 0.0005*** 0.0005***
(2.80) (2.81) (2.78)
ANN_RET 0.0051 0.0053 0.0050
(1.52) (1.54) (1.48)
ALTMANZ 0.0102 0.0103 0.0104
(1.57) (1.57) (1.60)
RESTRUCTURE − 0.0065 − 0.0061 − 0.0062
(-1.53) (-1.45) (-1.47)
IOR 0.0328** 0.0338** 0.0336**
(2.40) (2.48) (2.46)
NUM_ANALYSTS 0.0033 0.0033 0.0032
(0.53) (0.52) (0.51)
LNAFEE − 0.0512*** − 0.0483*** − 0.0501***
(-5.58) (-5.63) (-5.70)
ICMW 0.0047 0.0046 0.0048
(1.06) (1.00) (1.09)
RESTATE 0.0154*** 0.0161*** 0.0155***
(4.20) (4.39) (4.21)

N 8709 8709 8709

R2 0.097 0.097 0.098
Year, Firm, and Auditor Fixed Y Y Y
Cluster Industry Y Y Y

Panel B: Sustainability Activities

(1) (2) (3) (4) (5) (6)

ENV_SCOREt+1 ENV_SCOREt+1 SOC_SCOREt+1 SOC_SCOREt+1 GOV_SCOREt+1 GOV_SCOREt+1

AUD_RATIO − 1.8017 − 3.1862 3.4323 2.1226 5.5286*** 1.0873

(-0.84) (-1.68) (1.18) (1.61) (3.61) (1.12)
INDUSTRY_SPEC − 0.2126 − 0.3322 − 0.1870
(-0.31) (-0.50) (-0.36)
AUD_RATIO × INDUSTRY_SPEC 3.6004 2.0542 5.5467*
(0.75) (0.44) (1.70)
BIG4 − 0.8546 0.8054 − 2.5545***
(-0.85) (0.30) (-2.87)
AUD_RATIO × BIG4 3.2467 2.0570 6.7406***
(0.75) (0.92) (3.04)

N 5059 5059 5059 5059 5059 5059

R2 0.073 0.073 0.010 0.010 0.054 0.054
Control Variables Y Y Y Y Y Y
Year, Firm, and Auditor Fixed Y Y Y Y Y Y
Cluster Industry Y Y Y Y Y Y

17
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 8 disclosures (1A_RATIO) in t, t+1, and t+2, providing initial support for
Auditor Switches our hypothesis. AUD_RATIO is also positively associated with SOC_­
This table examines the relationship between upward (downward) auditor SCORE and GOV_SCORE, providing additional evidence in support of our
switches and the relative inclusion of clients’ Item 1A sustainability disclosures hypothesis.12
(1A_RATIO). All variables are defined in Appendix C. t-statistics are presented in
parentheses. The standard error is clustered at the auditor level. *p < 0.1, **p <
5. Results
0.05, ***p < 0.01 (two-tailed tests).
(1) (2) (3) 5.1. Main analyses
1A_RATIOt 1A_RATIOt+1 1A_RATIOt+2

IMPROVE − 0.0254** − 0.0384** − 0.0409 5.1.1. Sustainability disclosures

(-2.88) (-2.66) (-1.47) In Table 4, we first examine the relationship between auditor sus­
POST 0.0006 − 0.0051 − 0.0383 tainability focus and client Item 1A sustainability disclosures. We pre­
(0.07) (-0.31) (-1.91) dict that auditor sustainability focus is positively associated with client
IMPROVE × POST − 0.0010 0.0240* 0.0622**
(-0.08) (2.37) (2.55)
sustainability reporting. We initially examine the relationship between
SIZE − 0.0049 0.0042 0.0045 current year sustainability focus and current year Item 1A disclosures.
(-0.58) (0.49) (0.49) We find a positive relationship between relative auditor sustainability
MTB − 0.0002 − 0.0000 − 0.0007 focus and clients’ sustainability disclosures (1A_RATIOt, t = 3.19).
(-0.26) (-0.11) (-1.67)
However, one limitation of this analysis is that there could be a delay
LEVERAGE − 0.0217 0.0019 0.0152
(-1.27) (0.07) (0.56) between auditor-client sustainability alignment and the significance of
ROA − 0.0126 0.0363 0.0254 the topic appearing in the client’s financial reporting disclosures. As
(-0.49) (0.99) (0.61) such, we examine the relationship between current year auditor sus­
CASHFLOW − 0.0004 − 0.0211 − 0.0161 tainability focus and Item 1A disclosures one and two years in the future.
(-0.02) (-0.39) (-0.31)
We continue to find a positive association between auditor sustainability
LIQ − 0.0203 − 0.0440 − 0.0250
(-1.02) (-1.68) (-0.97) focus and clients’ subsequent sustainability disclosures (1A_RATIOt+1, t
LOSS − 0.0256** − 0.0003 − 0.0119 = 5.02; 1A_RATIOt+2, t = 6.19).13 One possible explanation is that it
(-3.35) (-0.04) (-1.17) takes clients some time to fully incorporate the significance of sustain­
GM − 0.0000 − 0.0000 − 0.0005
ability risk in their disclosures. We provide evidence of a positive rela­
(-0.09) (-0.07) (-1.05)
ANN_RET 0.0034 − 0.0007 0.0020 tionship between auditor sustainability focus and client sustainability
(0.49) (-0.15) (0.21) disclosures, consistent with clients who already were planning to ramp
ALTMANZ 0.0157 0.0272 0.0227 up their sustainability reporting matching with audit firms who place
(1.51) (1.88) (1.71) greater emphasis on sustainability.
RESTRUCTURE − 0.0071 − 0.0236 − 0.0066
(-0.42) (-1.35) (-0.38)
IOR 0.0249 0.0008 − 0.0073 5.1.2. Sustainability activities
(0.90) (0.02) (-0.32) We next examine whether auditor sustainability focus is associated
NUM_ANALYSTS 0.0028 0.0020 0.0113 with client sustainability activities, differentiated between environ­
(0.38) (0.26) (1.10)
mental, social, and governance activities. In Table 5, Panel A we do not
LNAFEE 0.0117 0.0062 0.0111
(1.13) (0.40) (1.72)
find evidence of an association between auditor sustainability focus and
ICMW 0.0025 − 0.0037 − 0.0403 environmental activities up to two years in the future. While the asso­
(0.12) (-0.14) (-1.86) ciation between auditor sustainability focus and environmental activ­
RESTATE 0.0118 0.0115 − 0.0069 ities is negative in direction, and larger in t+2 (t = − 1.49), it is
(0.57) (0.60) (-0.46)
statistically insignificant. One possible explanation is that environ­
N 329 286 246 mental activities require fundamental business practice changes (SASB,
R2 0.417 0.425 0.450
2022b).14 For instance, expanding environmental focus beyond green­
Year Fixed N N N
Industry Fixed Y Y Y house gas emissions and ecological impacts would require additional
Cluster Auditor Y Y Y investigation before a firm makes substantial changes. Environmental

Compustat and Audit Analytics to construct our control variables. Our

final Item 1A disclosure sample includes 9588 observations. Our final
sustainability activities sample is further restricted to 5651 observations
with available Sustainalytics data. Table 2 provides additional infor­
mation on our sample selection process.
We present descriptive statistics in Table 3. For ease of interpreting
our auditor sustainability focus and Item 1A sustainability ratios, we
multiply our raw values by 100 to reflect percentages in all our analyses.
On average, 0.105 percent of auditor Twitter communications relate to
sustainability. However, there is a sizable range in the extent of auditor
focus on sustainability from zero to 0.579 percent. Approximately 0.08
percent of clients’ Item 1A risk factor disclosures pertain to sustain­
ability. These disclosures also vary from zero to 1.67 percent, suggesting
that there are differences in firm sustainability disclosures although
sustainability risk discussions are not a large component of Item 1A.
Firms in our sample are large, profitable, have institutional ownership,
and are not likely to have an internal control material weakness or a
restatement. We further find that an auditor’s sustainability focus
(AUD_RATIO) is positively correlated with clients’ Item 1A sustainability
12
Using Pearson correlation coefficient estimation, we continue to note a
positive and significant relationship between AUD_RATIO and 1A_RATIO in t+1
(0.065) and t+2 (0.246).
13 2
χ -tests show that the coefficient on AUD_RATIO in t+1 (t+2) is more
positive than that in year t with a p-value<0.001 (p < 0.001). We alternatively
examine the relationship between the auditor sustainability focus and the
presence of Item 1A sustainability disclosures. We continue to find a positive
association between auditor sustainability focus and disclosure likelihood up to
two years in the future.
14
We alternatively follow Berg et al. (2022) and use the 26 SASB categories
over five dimensions (environment, social capital, human capital, business
model and innovation, and leadership and governance) to classify 126 of the
163 available Sustainalytics variables. Notably, Berg et al. (2022) do not pro­
vide any details about their classification process. Based on our granular clas­
sification attempt, we find that our results are attributable to social capital and
leadership and governance sustainability topics, consistent with the overall
social and governance categories provided by Sustainalytics. Within the envi­
ronment dimension, we find that auditor sustainability focus is positively
associated with waste and hazardous materials management (t = 1.69) and
negatively associated with ecological impact (t = − 1.72).

18
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table 9
Change in Sustainability Disclosures and Activities
This table examines the relationship between the change in auditor sustainability focus (ΔAUD_RATIO) and the change in clients’ sustainability disclosures and ac­
tivities (Δ1A_RATIO, ΔENV_SCORE, ΔSOC_SCORE, and ΔGOV_SCORE). All variables are defined in Appendix C. t-statistics are presented in parentheses. *p < 0.1, **p <
0.05, ***p < 0.01 (two-tailed tests).
(1) (2) (3) (4)

Δ1A_RATIO ΔENV_SCORE ΔSOC_SCORE ΔGOV_SCORE

ΔAUD_RATIO 0.1243*** − 1.6796 0.8472 0.1499***

(4.70) (-1.38) (0.68) (4.69)
ΔSIZE 0.0086 0.1054 0.8903** 0.0103
(1.39) (0.28) (2.56) (1.38)
ΔMTB 0.0001 − 0.0029 0.0018 0.0001
(1.30) (-0.46) (0.35) (1.30)
ΔLEVERAGE 0.0093 − 1.4385 − 0.5138 0.0109
(1.64) (-1.29) (-0.62) (1.59)
ΔROA − 0.0160 − 2.1736*** 0.6982 − 0.0188
(-1.00) (-3.06) (1.47) (-1.00)
ΔCASHFLOW 0.0267 1.0258 − 1.7359 0.0317
(1.26) (0.99) (-1.55) (1.26)
ΔLIQ − 0.0021 − 0.7417 − 1.5260 − 0.0026
(-0.22) (-1.10) (-1.14) (-0.23)
LOSS 0.0020 − 0.1669 − 0.1033 0.0024
(0.55) (-1.12) (-0.60) (0.57)
ΔGM − 0.0009* 0.2880*** 0.0429 − 0.0010*
(-1.98) (5.25) (1.17) (-2.00)
ΔANN_RET − 0.0060* − 0.0604 − 0.2682** − 0.0071*
(-1.94) (-0.52) (-2.18) (-1.94)
ΔALTMANZ 0.0101** − 0.0141 0.2239 0.0120**
(2.08) (-0.03) (0.38) (2.07)
RESTRUCTURE − 0.0012 − 0.2936** 0.0074 − 0.0015
(-0.50) (-2.06) (0.06) (-0.53)
IOR − 0.0014 0.1616 0.0455 − 0.0017
(-0.36) (0.52) (0.17) (-0.38)
NUM_ANALYSTS 0.0016 0.1343** 0.0572 0.0019
(1.05) (2.17) (0.65) (1.04)
LNAFEE − 0.0017 0.0063 − 0.0652 − 0.0020
(-1.13) (0.05) (-0.82) (-1.08)
ICMW − 0.0013 0.3166 − 0.2898 − 0.0017
(-0.27) (0.93) (-0.65) (-0.29)
RESTATE 0.0008 − 0.0339 0.2929 0.0008
(0.31) (-0.18) (1.23) (0.24)

N 4957 3400 3400 3400

R2 0.196 0.045 0.116 0.196
Year Fixed Y Y Y Y
Industry Fixed Y Y Y Y
Cluster Industry Y Y Y Y

risks could also be inherent to a client’s business activities or outside of
the scope of auditor discussions to the extent that financial reporting is
not materially affected.
However, we do find a positive association between the extent of
auditor sustainability focus and client social and governance sustain­
ability activities in Panels B and C, respectively.15 Specifically, we find a
positive association between auditor sustainability focus and social
sustainability activities in the subsequent two years (SOC_SCOREt+1, t =
1.82; SOC_SCOREt+2, t = 2.86). Additionally, we find a positive associ­
ation between auditor sustainability focus and governance activities in
the current (GOV_SCOREt, t = 2.43) and following years
(GOV_SCOREt+1, t = 4.08; GOV_SCOREt+2, t = 5.81). One possible
explanation is that auditor-client sustainability alignment can yield
greater discussions surrounding governance activities such as business
ethics, management of the legal and regulatory environment, and sys­
temic risk management, and social activities such as human rights and
15
We believe that the total sustainability score provided by Sustainalytics is a
high-level measure that does not enable us to conduct a more granular
assessment of the efforts firms make. Nonetheless, we do find evidence of a
positive association between AUD_RATIO and total sustainability activities in
t+2 (t = 1.85). We also alternatively examine median monthly historical
weighted sustainability scores and find qualitatively similar results.
community relations (SASB, 2022a).
5.1.3. Alternative measures
We recognize that our auditor sustainability focus measure could be
affected by two factors: the presence of words containing little useful
information or an understatement of the number of sustainability words
per tweet. We address these concerns three ways. For our first two
methods, we exclude stop words, which are the most commonly used
words in the text (e.g., “an”, “the”, “and”) that increase text length but
do not focus on specific content. We recognize that such refinement of
our measure reduces concerns surrounding words included in our text
that carry little useful information. First, we use the English stop words
from the NLTK dictionary (AUD_RATIO_NLTK). Second, we use a more
extensive English stop word dictionary from the GitHub community
(AUD_RATIO_GHB). To have a comparable analysis with our Item 1A
disclosures, we also remove stop words from the disclosures using the
same stop word dictionary (e.g., if we are testing the NLTK dictionary,
1A_RATIO is also adjusted for stop word removal using the NLTK dic­
tionary). In Table 6, Panel A we continue to find a positive association
between auditor sustainability focus and client sustainability disclosures
in t+1. In Panels C and D, we also continue to find a positive and sig­
nificant relationship between auditor sustainability focus and social and
governance sustainability activities. While AUD_RATIO_NLTK is not
significantly associated with social activities in t+1, the association is in

19
M. Liu et al.
the predicted direction.
Third, we create a tweet level measure of auditor sustainability focus
(AUD_RATIO_TWEET). Even though a tweet includes only one sustain­
ability word matching our dictionary, the entire communication could
be related to sustainability, lowering the numeric value of our ratio. We
thus examine whether the overall ratio of sustainability tweets to total
tweets in a year is associated with client sustainability disclosures and
activities. In Panel A, we find consistent evidence that auditor sustain­
ability focus is positively associated with sustainability disclosures. In
Panels C and D, we also find that auditor sustainability focus is positively
associated with social and governance sustainability activities in t+1.
5.2. Auditor characteristics
There could be auditor characteristics that moderate auditors’ sus­
tainability role. We explore two such characteristics in Table 7. Specif­
ically, we examine whether the use of a national industry specialist
(INDUSTRY_SPEC) or the use of a Big 4 auditor (BIG4) affects the rela­
tionship between auditor sustainability focus and client sustainability
reporting in t+1. Using an industry specialist or a Big 4 auditor could
result in higher audit quality, possibly promoting sustainability align­
ment and in turn, sustainability reporting (e.g., Reichelt & Wang,
2010).16 Industry specific factors such as competitiveness, supplier re­
lationships, technological developments, or geographic driven decisions
(AICPA, 2021) could be better understood by an industry specialist than
a non-specialist. Further, Big 4 auditors are more likely to have sus­
tainability experts than other auditors (Boudreau, 2022), also increasing
sustainability understanding.
In Panel A, we find that the use of an industry specialist positively
enhances the association between auditor sustainability focus and client
disclosures (t = 2.29). Similarly, we find that using a Big 4 auditor is
incrementally associated with the extent of client disclosures beyond
auditor sustainability focus (t = 2.99). In Panel B, the association be­
tween auditor sustainability focus and governance activities is signifi­
cantly more positive when the auditor is a national specialist
(AUD_RATIO*INDUSTRY_SPEC, t = 1.70) or a Big 4 auditor (AUD_RA­
TIO*BIG4, t = 3.04). While we do not note an association between our
moderating auditor characteristics and social sustainability activities in
t+1, in an untabulated analysis we find that utilizing a Big 4 auditor
positively moderates the association between auditor communications
and social activities in t+2 (t = 3.84). One possible explanation is that
industry specialists and Big 4 auditors are more likely to further
communicate the importance of sustainability to their similarly focused
clients, expounding national audit office sustainability communications.
5.3. Auditor switches
The auditor-client relationship could change in the event of an
auditor switch, including mutually assortative matching decisions be­
tween auditors and clients with similar sustainability focuses. Specif­
ically, we investigate whether auditor switches from an auditor that
places less (greater) focus on sustainability to an auditor that places
greater (less) focus on sustainability, hereafter an upward (downward)
switch, is incrementally associated with client sustainability disclosures.
We limit our sample to client observations where there is an auditor
switch among PCAOB annually inspected audit firms to ensure that we
have auditor sustainability focus for both auditors. We cluster the
16
The provision of sustainability assurance engagements could also create a
communication channel between auditors and their clients focused on sus­
tainability as a critical issue. As such, we alternatively control for audit-related
fees and total nonaudit fees in our main analyses. Our results remain un­
changed. While the provision of nonaudit tax services could further facilitate an
understanding of a client’s sustainability risks (e.g., Huseynov & Klamm, 2012),
we do not find evidence of a moderating effect.
20
Accounting, Organizations and Society xxx (xxxx) xxx
standard error by auditor. In Table 8, we find evidence that following an
upward auditor switch (IMPROVE*POST), clients report greater sus­
tainability disclosures in t+1 (1A_RATIOt+1, t = 2.37) and t+2
(1A_RATIOt+2, t = 2.55). That is, we find that clients switching to au­
ditors with a greater sustainability focus have additional disclosures in
the post period. Likewise, following a downward auditor switch, clients
report fewer sustainability disclosures in t+1 and t+2.
Anecdotally, within our sample sustainability does not appear to be a
primary auditor switch consideration.17 Rather, audit quality, fees, and
auditor communication appear to be key switch drivers. However,
several client firms in our sample note that sustainability is a component
of the switch process. For instance, sustainability discussions are
included in the request for proposal process. Two clients remark that
thought leadership and auditor ability to attract and retain talent, off­
shoots of good sustainability, are part of the auditor selection consid­
eration. Another client acknowledges the strength of their new auditor’s
sustainability practice although it was not a key factor of the switch.
Nevertheless, the client mentions that a recent increase in the emphasis
of the measurement and public disclosure of sustainability metrics has
led to more frequent sustainability discussions with their auditor. On a
broader note, a client communicated that following audit quality, they
sought an auditor that understood and respected their history and
mission, including diversity. The prior auditor was seen as having little
to no real diversity in terms of partners or staff. As such, we provide
additional context surrounding our auditor switch results.
Our analyses examine sustainability reporting in a given year. To
better understand whether auditors’ sustainability role results in long-
term changes, we further conduct a change analysis in Table 9.18 We
examine whether change in auditor sustainability focus (ΔAUD_RATIO)
is associated with changes in sustainability reporting, through sustain­
ability disclosures (Δ1A_RATIO) and sustainability activities
(ΔENV_SCORE, ΔSOC_SCORE, and ΔGOV_SCORE). We find that an in­
crease in auditor sustainability focus is associated with an increase in
client sustainability disclosures (Δ1A_RATIO, t = 4.70) and an increase
in sustainability activities (ΔGOV_SCORE, t = 4.69). While the associa­
tion with ΔENV_SCORE is large (t = − 1.38), it is statistically insignifi­
cant. Our results provide further evidence that auditors appear to serve
in a sustainability information intermediary role.
6. Conclusion
Sustainability is an increasingly important issue, with client firms
facing material operational risks. We provide insights into the rela­
tionship between auditor sustainability focus and clients’ sustainability
reporting. As sustainability reporting and disclosure guidance come
from a variety of sources, including the SEC, SASB, GRI, and ISO, it can
be difficult for clients to fully incorporate sustainability information into
their reporting practices, potentially leading to positive assortative
matching between auditors with greater sustainability focus and clients
who already were planning to ramp up their sustainability reporting. We
find that auditor sustainability focus is positively associated with client
sustainability reporting. Specifically, we find that auditor sustainability
focus is positively associated with client sustainability disclosures and
social and governance sustainability activities. Additional disclosures
reflect reduced information asymmetry with external stakeholders
17
We informally reached out to client firms in our sample with an auditor
switch asking why there was an auditor switch and whether any part of the
decision related to sustainability.
18
We also conduct a falsification test, where we regress current auditor sus­
tainability focus on client sustainability reporting in t-1. We do not find our
predicted positive relationship. Rather, we find nonsignificant relationships
between current auditor sustainability importance, prior client disclosures (t =
− 0.86), and prior environmental, social, and governance activities, suggesting
that our results are not attributable to reverse causal inferences.
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

about sustainability risks. We also find that auditor-client sustainability
alignment is associated with clients altering their sustainability activ­
ities through sustainability scores. Our results suggest that auditor sus­
tainability focus is positively associated with the operational
management of sustainability issues.
We measure auditors’ sustainability focus by examining the sus­
tainability focus in auditors’ tweets on Twitter. We use tweeting
behavior to capture both what audit firms are publicly saying on social
media and privately discussing with prospective and current clients.
Based on semi-structured interview evidence, we find that tweets are
carefully drafted by audit firms’ communication departments and
demonstrate thought leadership, expertise, and credibility across topical
areas. Thus, tweets can not only educate the market on sustainability
developments but also increase service offering awareness, ultimately
focused on the attainment of additional business. We thereby substan­
tiate that tweets are a reasonable measure for auditor sustainability
focus. Collectively, we provide evidence on the role of the auditor in
sustainability reporting.
Data availability
The authors do not have permission to share data.
Acknowledgements
We are grateful for Twitter granting access to their API for academic
research. We also appreciate the helpful comments from Mark Peecher,
Hans Christensen, Bertrand Malsch (commentator), Dan Sunderland, an
anonymous reviewer, and participants at the Accounting, Organizations
and Society Conference on Accounting for Sustainability and Climate
Change. Stephanie Walton acknowledges support from Louisiana State
University.

Appendix A. Twitter Communications and Item 1A Disclosures

In this appendix, we provide additional information on the extent of PCAOB annually inspected auditors’ Twitter communications and clients’ Item
1A sustainability disclosures.

Twitter Communications

We use the Twitter Academic Developer API to download every tweet from each auditor’s official Twitter accounts beginning in 2011. For each
auditor, we identify between one to six official Twitter accounts. After removing duplicate tweets and retweets, we have 370,762 tweets in total from
2011 to 2021. Using the keyword matching method with the sustainability word dictionary from Cannon et al. (2020), we calculate the total words
communicated on Twitter by an auditor and the total sustainability words used. We conduct this process on a tweet-by-tweet basis as each client firm
has a potentially different fiscal year end, requiring the use of different start and stop dates for the calculation of aggregate sustainability and total
words during the year. Below, we provide an example of our keyword matching process using a tweet from Deloitte (@Deloitte) made on September
15, 2021.

Text = “#ClimateChange should become a focal point in everything that a city does and also transform operational practices and processes.
Discover how #Governance around #Sustainability needs to change: https://t.co/9wLkBV2dnO”
Cleaned text (no stop word removal):
“climatechange should become a focal point in everything that a city does and also transform operational practices and processes discover how
governance around sustainability needs to change”.
Matched “business practice” words: [‘climatechange’] (i.e., Climate Change).
Matched “product” words: Null.
Matched “philanthropy” words: Null.
Matched “general” words: [’sustainability’]
Total sustainability words: 2 words.
Total words: 27 words.
Cleaned text (using English stop word dictionary from NLTK):
“climatechange become focal point everything city also transform operational practices processes discover governance around sustainability needs
change”.
Matched “business practice” words: [’climatechange’]
Matched “product” words: Null.
Matched “philanthropy” words: Null.
Matched “general” words: [’sustainability’]
Total sustainability words: 2 words.
Total words: 17 words.
Cleaned text (using English stop word dictionary from GitHub community):
“climatechange focal point city transform operational practices processes discover governance sustainability change”.
Matched “business practice” words: [’climatechange’]

21
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Matched “product” words: Null.

Matched “philanthropy” words: Null.
Matched “general” words: [’sustainability’]
Total sustainability words: 2 words.
Total words: 12 words.
Using calendar years for visualization purposes, we provide Table A1 displaying auditor sustainability focus as the ratio of sustainability words to
total words. Stop words are removed using the NLTK dictionary. We find a range of focus placed on sustainability over time. Note that values reflected
below are on a calendar year basis and are for descriptive purposes only. Depending on a client’s fiscal year end auditor sustainability focus could be
higher or lower given the timing of tweets. Figure A1 summarizes the use of sustainability keywords for each category described by Cannon et al.
(2020): general, product, business practice, and philanthropy.

Table A1
Sustainability Words to Total Words Tweeted by Auditors (all percentages)

Year

Auditor 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
BDO 0.10 0.25 0.23 0.18 0.12 0.11 0.12 0.11 0.18 0.07 0.12
Cohen 0.00 0.36 0.00 0.02 0.00 0.34 0.10 0.10 0.06 0.06 0.11
Crowe 0.00 0.04 0.02 0.02 0.10 0.14 0.13 0.10 0.15 0.17 0.12
Deloitte 0.39 0.24 0.18 0.14 0.14 0.09 0.08 0.13 0.20 0.24 0.43
EY 0.60 0.29 0.12 0.15 0.21 0.09 0.10 0.09 0.13 0.42 0.64
Grant Thornton 0.07 0.03 0.13 0.92 0.45 0.13 0.10 0.32 0.17 0.09 0.28
KPMG 0.41 0.48 0.21 0.30 0.23 0.15 0.20 0.07 0.14 0.24 0.24
Malone Bailey 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.25 0.00 0.00 0.00
Marcum 0.23 0.32 0.15 0.06 0.15 0.06 0.09 0.05 0.08 0.13 0.07
Moss Adams 0.42 0.18 0.42 0.10 0.21 0.25 0.29 0.00 0.00 0.00 0.00
PwC 0.28 0.41 0.21 0.20 0.23 0.11 0.21 0.12 0.19 0.30 0.20
RSM 0.21 0.10 0.23 0.17 0.17 0.13 0.17 0.14 0.22 0.19 0.17

Fig. A1. Summary of average scaled sustainability words in auditors’ tweets.

Previous studies note that human coders can contribute to controlling and improving the validity of algorithm-based measures (e.g., Lappeman,
Clark, Evans, Sierra-Rubia, & Gordon, 2020; Northcutt, Athalye, & Mueller, 2021). In the current study, we use two human coders to help validate our
dictionary-based (D-B) measurement of independent variables at the tweet level, that is, whether a tweet is sustainability related or not. Specifically,
we use two authors as independent human coders. The validation analysis was completed in three steps.
First, we randomly selected one hundred sustainability related tweets and one hundred non-sustainability related tweets using the D-B analysis,
and then randomly sorted the two hundred tweets for each human coder. Second, we trained the two human coders on the definition of sustainability
in our study and then asked them to independently label each tweet by setting an indicator variable Sustainability equal to 1 if “this is a sustainability
related tweet,” and 0 otherwise. Third, we compared the label created by the two human coders via Sustainability and the classification using our D-B
method. In Table A2, the kappa coefficients for the two human coders are higher than 95 percent (0.98), indicating high agreement between the two
human coders (Landis & Koch, 1977). Additionally, the comparison results show that the label errors of the D-B method are lower than 5 percent when
compared with both human coders (3.5 percent/4.5 percent), indicating an acceptable validity of the sustainability measurement. As such, we provide
additional confidence in the use of our D-B method.

Table A2
The Comparison of “Sustainability” Labels from Human Coders and D-B Method

D-B method vs. H-C1 D-B method vs. H-C2 H-C1 vs. H-C2

Error Rate 0.035 0.045 0.011

Accuracy 0.965 0.955 0.989
95% CI of Accuracy (0.929, 0.989) (0.916, 0.979) (0.964, 0.999)
(continued on next page)

22
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Table A2 (continued )
D-B method vs. H-C1 D-B method vs. H-C2 H-C1 vs. H-C2

No Information Rate 0.515 0.518 0.518

P-Value [Acc > NIR] 0.000 0.000 0.000
Kappa 0.930 0.910 0.980
Pos Pred Value 0.950 0.939 0.990
Neg Pred Value 0.980 0.970 0.990
Note: Human coder (H-C1/H-C2) results are treated as the “true results,” results from dictionary-based (D-B) method are treated
as “predicted results.”

Item 1A Disclosures

We use the same keyword matching process and sustainability word dictionary from Cannon et al. (2020) to classify client firms’ Item 1A risk factor
disclosures. Stop words are removed using the NLTK dictionary. The average length of Item 1A disclosures in our sample is 3845 words. Below, we
provide three excerpts from Item 1A disclosures.

Ameren Corp. (CIK 1002910, 2013 fiscal year)

We are also subject to liability under environmental laws that address the remediation of environmental contamination of property now or
formerly owned by us or by our predecessors, as well as property contaminated by hazardous substances that we generated. Such sites include MGP
sites and third-party sites, such as landfills. Additionally, private individuals may seek to enforce environmental laws and regulations against us and
could allege injury from exposure to hazardous materials or seek to compel remediation of environmental contamination or recover damages resulting
from that contamination.

Capri Holdings Ltd (CIK 1530721, 2020 fiscal year)

Increased scrutiny from investors and others regarding our corporate social responsibility initiatives, including environmental, social and other
matters of significance relating to sustainability, could result in additional costs or risks and adversely impact our reputation.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders and customers have
increasingly focused on the environmental, social and governance (“ESG”) or “sustainability” practices of companies. These parties have placed
increased importance on the implications of the social cost of their investments. If our ESG practices do not meet investor or other industry stakeholder
expectations and standards, which continue to evolve, our brand, reputation and customer and employee retention may be negatively impacted. Any
sustainability report that we publish or other sustainability disclosure we make may include our policies and practices on a variety of social and ethical
matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, product
quality, supply chain management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG practices
or the speed of adoption. We could also incur additional costs and require additional resources to monitor, report and comply with various ESG
practices. Also, our failure, or perceived failure, to meet the standards included in any sustainability disclosure could negatively impact our reputation,
employee retention and the willingness of our customers and suppliers to do business with us.

Sprouts Farmers Market, Inc. (CIK 1575515, 2018 fiscal year)

Consumer preferences often change rapidly and without warning, moving from one trend to another among many product or retail concepts. Our
performance is impacted by trends regarding healthy lifestyles, dietary preferences, convenient options, natural and organic products, meal solutions,
ingredient transparency and sustainability, and vitamins and supplements, as well as new and evolving methods of engaging with and delivering our
products to our customers. Consumer preferences towards vitamins, supplements or natural and organic food products might shift as a result of, among
other things, economic conditions, food safety perceptions, scientific research or findings regarding the benefits or efficacy of such products, national
media attention and the cost or sustainability of these products. Our store offerings currently include natural and organic products and dietary
supplements. A change in consumer preferences away from our offerings would have a material adverse effect on our business. Additionally, negative
publicity over the safety, efficacy or benefits of any such items may adversely affect demand for our products, and could result in lower customer
traffic, sales, results of operations and cash flows.
Figure A2 shows the summary of average sustainability words to total words in clients’ Item 1A disclosures. Business practice sustainability words
are a dominant representation of existing sustainability disclosures, in contrast to auditors sharing a variety of sustainability information categories. In
Figure A3 we compare average scaled sustainability words in clients’ Item 1A in year t to auditors’ tweets in the current and prior year. We note a
similar trend.

23
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

Fig. A2. Summary of clients’ Item 1A sustainability disclosures.

Fig. A3. Comparison of scaled sustainability words in auditors’ tweets and clients’ Item 1A sustainability disclosures

Appendix B. Dictionaries

Sustainability Dictionary (Cannon et al., 2020)

Philanthropy (18): altruism, altruist, altruistic, charitable, charities, charity, community giving, corporate giving, corporate political activities,
corporate political activity, employee volunteer effort, employee volunteer program, philanthropic, philanthropist, philanthropy, social campaign,
social object, volunteerism.
Business Practice (155): age discrimination, alternative trade, animal ethics, atmospheric pollution, beneficial reuse, biodiversity, biological
diversity, biomass energy, biomass fuel, biomimicry, bribery and corruption, business and society, business ethics, business in the community, carbon
capture, carbon cost, carbon dioxide emission, carbon disclosure, carbon emission, carbon footprint, carpooling, cause marketing, cause related
marketing, CERES, climate change, climatic change, common good, community activism, conscious consumption, conservation, consumer activism,

24
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

consumer protection, consumerism, contamination, deceptive advertising, declaration of human right, design for environment, discrimination, eco
efficiency, ecological community, ecological economy, ecological footprint, ecology, energy from biomass, environmental accounting, environmental
audit, environmental economics, environmental ethics, environmental impact analysis, environmental impact assessment, environmental law,
environmental legislation, environmental management, environmental marketing, environmental performance, environmental protection agency,
environmental risk, environmental rule, environmentalist, environmentally responsible, environs, ethical action, ethical business, ethical leadership,
ethical policy, ethical sourcing, ethical trading initiative, ethics education, exploitation, fair trade, false advertising, forest stewardship council, free
choice, free speech, freedom of expression, freedom of speech, friends of the earth, FTSE4good index, gender balance, gender equality, gender equity,
global environmental, global warming, green business, green chemistry, green jobs, green marketing, greenhouse effect, greenhouse gas, green­
washing, hazardous, health and safety, health and social care, health value, human ecology, human right, illegal employment, inclusive business,
Kyoto protocol, living wage, local community, marketing ethics, microlending, minimum wage, nondiscrimination, offshoring, ozone layer, pollution,
poverty, preservation, racism, recycling, renewable energies, renewable energy, resource efficiency, responsible business, responsible consumption,
responsible investment, responsible investor, responsible leadership, responsible management, responsible practice, responsible supply chain, ride
sharing, rightsizing, social acceptance, social advertising, social auditing, social benefit, social collaboration, social contract, social control, social cost,
social dialogue, social enterprise, social entrepreneur, social innovation, social investment, social justice, social movement, social promotion, social
reporting, social risk, socially responsible, sustainable innovation, sustainable investment, sustainable leadership, sustainable marketing, sustainable
site development, sustainable workplace, vanpooling, waste management, waste reclamation, work life balance, world commission on environment.
Product (18): clean technologies, clean technology, consumer product safety, dangerous product, eco design, eco-design, eco-innovation, green
building, green design, green technologies, green technology, ISO14001, local food, locally grown, organic, regional food, sustainable design, sus­
tainable production.
General (28): accountability 1000, corporate accountability, corporate citizenship, corporate social and environmental responsibilities, corporate
social and environmental responsibility, CSR, DJSI, Dow Jones Sustainability Index, global reporting initiative, good corporate practice, integrated
reporting, ISO 26000, responsible care, social accountability, social responsibilities, social responsibility, socially sustainable, sustainability, sus­
tainable business, sustainable company, sustainable corporation, sustainable development, sustainable enterprise, sustainable organization, sus­
tainable tourism, sustainable use of resource, triple bottom, World Business Council for Sustainable Development.

Stop Word Dictionaries

Note: Stop words are the most common words in text. These are words researchers do not want to use to describe the topic of the content. A stop
word could be “the”, “a”, “an”, “in”.

NLTK Dictionary

[’i’, ‘me’, ‘my’, ‘myself’, ‘we’, ‘our’, ’ours’, ’ourselves’, ‘you’, “you’re”, “you’ve”, “you’ll”, “you’d", ‘your’, ’yours’, ‘yourself’, ’yourselves’, ‘he’,
‘him’, ’his’, ‘himself’, ‘she’, "she’s", ‘her’, ’hers’, ‘herself’, ‘it’, "it’s", ’its’, ‘itself’, ‘they’, ‘them’, ‘their’, ’theirs’, ’themselves’, ‘what’, ‘which’, ‘who’,
‘whom’, ’this’, ‘that’, “that’ll”, ‘these’, ‘those’, ‘am’, ’is’, ‘are’, ’was’, ‘were’, ‘be’, ‘been’, ‘being’, ‘have’, ’has’, ‘had’, ‘having’, ‘do’, ’does’, ‘did’,
‘doing’, ‘a’, ‘an’, ‘the’, ‘and’, ‘but’, ‘if’, ‘or’, ‘because’, ’as’, ‘until’, ‘while’, ‘of’, ‘at’, ‘by’, ‘for’, ‘with’, ‘about’, ‘against’, ‘between’, ‘into’, ‘through’,
‘during’, ‘before’, ‘after’, ‘above’, ‘below’, ‘to’, ‘from’, ‘up’, ‘down’, ‘in’, ‘out’, ‘on’, ‘off’, ‘over’, ‘under’, ‘again’, ‘further’, ‘then’, ‘once’, ‘here’, ‘there’,
‘when’, ‘where’, ‘why’, ‘how’, ‘all’, ‘any’, ‘both’, ‘each’, ‘few’, ‘more’, ‘most’, ‘other’, ‘some’, ‘such’, ‘no’, ‘nor’, ‘not’, ‘only’, ‘own’, ‘same’, ‘so’, ‘than’,
‘too’, ‘very’, ‘s’, ‘t’, ‘can’, ‘will’, ‘just’, ‘don’, “don’t", ‘should’, “should’ve”, ‘now’, ‘d’, ‘ll’, ‘m’, ‘o’, ‘re’, ‘ve’, ‘y’, ‘ain’, ‘aren’, “aren’t", ‘couldn’,
“couldn’t", ‘didn’, “didn’t", ‘doesn’, “doesn’t", ‘hadn’, “hadn’t", ‘hasn’, “hasn’t", ‘haven’, “haven’t", ‘isn’, “isn’t", ‘ma’, ‘mightn’, “mightn’t", ‘mustn’,
“mustn’t", ‘needn’, “needn’t", ‘shan’, “shan’t", ‘shouldn’, “shouldn’t", ‘wasn’, “wasn’t", ‘weren’, “weren’t", ‘won’, “won’t", ‘wouldn’, “wouldn’t"]

GitHub Dictionary

[’from’, ‘specifically’, ‘anyone’, ‘all’, ‘where’, ‘cq’, ‘example’, ‘hadn’, ‘xn’, ‘fa’, ‘using’, ‘since’, "there’s", ‘wish’, ‘t1’, ‘make’, ‘four’, ‘dd’, ‘didn’,
‘don’, ‘p1’, “you’re”, ‘best’, ‘seriously’, ‘around’, ‘six’, ‘section’, ‘she’, ‘he’, ‘eq’, ‘ask’, ’looks’, ‘and’, ‘appropriate’, "it’s", ‘thered’, “they’d", ‘non’,
‘very’, ‘iy’, ’lets’, ‘whither’, ’ps’, ‘etc’, ‘run’, ‘use’, ‘bx’, ‘py’, ‘which’, ‘fo’, ‘l2’, ‘mo’, ‘yourself’, ‘pl’, ‘asking’, ‘regarding’, ‘wasn’, ‘abst’, ’perhaps’, ‘say’,
‘stop’, ‘b1’, ‘tj’, ‘ax’, ‘a1’, ‘together’, ‘top’, ‘what’, ‘after’, ‘because’, ‘substantially’, ‘op’, ‘effect’, ’ss’, ‘p3’, ‘h3’, ‘obviously’, ‘could’, ‘wasnt’, ‘wi’, ‘hj’,
‘many’, ‘x3’, ‘http’, ‘end’, ‘the’, ‘never’, ‘bt’, ‘inner’, ‘meanwhile’, ‘jr’, ’yours’, ‘3b′, ‘fire’, ’his’, ‘ur’, ‘three’, “they’ll”, "how’s", ‘mn’, ‘rm’, ‘sent’,
‘therere’, ‘ab’, ‘back’, ‘well’, ’tends’, ‘similarly’, ’ys’, ‘ch’, ‘corresponding’, ‘rj’, ‘ix’, ‘different’, ‘sy’, ‘ne’, ‘cx’, ‘detail’, ‘pe’, ‘widely’, ‘en’, ‘go’, ‘system’,
‘mg’, ‘beside’, ‘indicated’, ‘previously’, ’rs’, ‘latter’, ‘seen’, ’hes’, ‘pk’, ‘her’, ‘aren’, ‘trying’, ‘aw’, ‘eg’, ‘done’, ‘look’, ‘ni’, ‘are’, ‘million’, ‘oj’, ‘asso­
ciated’, ‘a4’, ‘far’, ‘somethan’, ‘thickv’, ‘un’, ‘believe’, ‘theyd’, ’less’, ‘whom’, ’usefulness’, ‘briefly’, ‘uj’, ‘sup’, ‘bk’, ‘kept’, ‘ee’, ‘most’, ’os’, ‘ep’, ‘g’,
’les’, ‘m2’, ‘new’, ‘it’, ‘of’, ‘xk’, ‘except’, ‘thence’, ‘eleven’, ‘amount’, ‘contain’, ’miss’, ‘pd’, ‘needn’, ‘ut’, ‘v’, ’heres’, ‘everywhere’, ‘another’, ‘ny’,
‘werent’, ‘myself’, ‘your’, ‘truly’, ‘mean’, ‘think’, ‘willing’, ‘hence’, ‘s’, ‘b3’, ’seems’, ’pages’, ‘slightly’, ‘sn’, ‘useful’, ‘xi’, ‘p2’, ‘front’, ‘quite’, ‘but’,
‘cm’, ’js’, ‘km’, ‘put’, ‘thanx’, “that’ve”, ‘est’, ‘yl’, ’anyways’, ‘past’, ‘let’, ‘xl’, ‘amongst’, ‘for’, ‘find’, ‘3d′, ‘need’, “wouldn’t", ‘been’, ‘ma’, ‘edu’,
‘sufficiently’, ’has’, ‘ord’, ‘dx’, ‘sz’, ‘away’, ‘et’, ’mrs’, ‘rq’, ‘certain’, ‘nl’, ‘de’, ‘through’, ‘wo’, ‘cp’, ‘www’, ‘no’, ‘their’, ‘dp’, ‘i6’, “aren’t", ‘oo’,
‘anything’, ‘eight’, ‘getting’, ‘iq’, ‘usually’, ‘by’, ‘ol’, ’regardless’, ‘x’, ‘almost’, ‘ib’, ‘keep’, ‘act’, ‘ig’, ‘lt’, ‘m’, ‘therefore’, ‘a’, ‘added’, “it’d", ’thats’,
’goes’, ‘along’, ‘somebody’, ’knows’, ’means’, ‘out’, ‘oc’, ‘sa’, "why’s", ‘im’, ‘ph’, ‘both’, ‘did’, ‘largely’, ‘le’, ‘ref’, ‘ia’, ‘ec’, “you’ve”, ‘pn’, ‘appreciate’,
‘side’, ‘rl’, ‘fify’, ‘announce’, ‘al’, ’showns’, “doesn’t", ‘forty’, ‘who’, ‘ay’, ’ts’, “weren’t", ‘uo’, “won’t", ‘ro’, ‘xt’, “you’d", ‘noone’, ‘se’, “didn’t", ‘pc’,
’xs’, ‘ex’, ‘couldn’, ‘cit’, “i’m", ‘wouldnt’, ‘az’, ‘il’, ’its’, ‘over’, ‘eo’, ‘not’, ‘enough’, ’us’, ’resulted’, ‘n2’, ‘xf’, ‘better’, ‘too’, ‘affected’, ‘saw’, ‘pf’, ‘also’,
‘tx’, “it’ll”, ‘research’, ’uses’, ‘whether’, ’thus’, ‘ox’, ‘specifying’, ‘definitely’, ‘mt’, ‘suggest’, ‘adj’, ‘u201d′, ‘howbeit’, ‘unto’, ‘vol’, ‘considering’, ‘e’,
‘dk’, ‘hither’, ‘down’, ‘til’, ‘with’, ‘youre’, ‘h’, ’downwards’, ‘l’, ‘shed’, ‘approximately’, ‘ok’, ‘two’, “we’ll”, ‘eighty’, ‘fy’, ‘pt’, ‘thereafter’, ‘6o′,
‘without’, ‘gr’, ‘present’, ‘ue’, ‘lj’, ‘himself’, ‘more’, “haven’t", ‘try’, ‘becoming’, ‘overall’, ‘specified’, ‘obtain’, ‘r2’, ’vols’, ‘interest’, ‘d2’, ‘get’, ‘gl’, ‘bu’,
‘recently’, ‘despite’, ‘kg’, ‘research-articl’, ‘if’, ‘invention’, ‘pi’, ‘mr’, ’allows’, ‘ie’, ’regards’, ‘si’, “they’ve”, ‘a3’, ‘whence’, ‘importance’, ‘seem’, ‘lest’,
’as’, ‘sincere’, ’becomes’, ‘av’, ‘i8’, ’fs’, ‘cu’, ‘formerly’, “i’d", ‘immediate’, ‘lately’, ‘sp’, ‘whose’, ‘maybe’, ‘probably’, ’afterwards’, ‘cc’, ‘pr’, ’ms’, ‘kj’,
’serious’, ‘must’, ‘my’, ‘mine’, ‘fi’, ‘giving’, ‘might’, ‘ej’, ‘ao’, “should’ve”, ‘hundred’, ‘shown’, ‘unlikely’, ‘just’, ‘au’, ‘third’, ‘everyone’, “they’re”, ‘pm’,

25
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

‘du’, ‘know’, ‘sc’, ‘see’, ‘want’, ‘used’, ‘6b′, ‘ca’, ’sometimes’, ‘sec’, ‘than’, ’always’, ‘rather’, ‘little’, ‘in’, ‘latterly’, ‘move’, ‘thoughh’, “we’ve”, ‘o’,
‘going’, ‘thereby’, ‘pj’, ‘hello’, ‘b’, ‘liked’, ‘ltd’, ‘secondly’, ‘re’, ‘dl’, ‘okay’, ‘e3’, "she’s", ‘shan’, ‘ll’, ‘lr’, ‘when’, ‘anywhere’, “there’ve”, ’tries’, ‘dr’,
‘wouldn’, “mightn’t", ‘respectively’, ‘tip’, ‘fc’, ‘y2’, ‘arent’, ‘elsewhere’, ‘whomever’, ‘anyway’, ‘f’, ‘qv’, ‘hereafter’, ‘am’, ‘jj’, ‘e2’, ‘given’, ‘mustn’,
“she’d", ‘tv’, ‘unlike’, ‘y’, ’affects’, ‘currently’, ‘ninety’, ‘gi’, ‘ei’, ’selves’, “wasn’t", ‘ti’, ‘haven’, ‘doing’, ‘nearly’, ‘inc’, ‘sorry’, ‘take’, ’keeps’, ‘though’,
‘cy’, ‘took’, ‘itself’, ‘anymore’, ‘nc’, ‘gy’, ‘noted’, ’gives’, ‘viz’, ‘once’, ‘vj’, ‘possibly’, ‘st’, ‘therein’, ‘thousand’, ‘such’, ’words’, ‘ba’, ‘can’, ‘came’, ‘u’,
‘mug’, ‘herself’, ‘seeming’, ’begins’, ‘former’, ‘none’, ‘really’, ‘saying’, ‘appear’, ‘ng’, ’gets’, ‘zz’, ‘show’, “shan’t", ‘own’, ‘ra’, ‘home’, ‘fn’, ’besides’,
‘ju’, ‘only’, ‘self’, ‘thou’, ‘ct’, ‘every’, ‘tried’, ‘bottom’, ‘into’, ‘df’, ‘sensible’, ‘these’, ‘ow’, ‘value’, ‘ever’, ‘t’, ‘que’, ‘about’, ‘bd’, ‘ml’, ’plus’, ‘then’, ’ls’,
‘mostly’, ‘other’, ‘novel’, ‘right’, ‘vt’, ‘xj’, ‘resulting’, ‘same’, ‘te’, ‘et al.’, ’various’, ‘cant’, ‘here’, ‘biol’, ‘we’, ‘lf’, ‘via’, ‘yj’, ‘t3’, ‘oa’, ‘ri’, ‘wed’, ‘apart’,
‘gave’, “can’t", “don’t", ‘off’, ‘first’, ’unless’, ‘either’, ‘ea’, ’makes’, ‘significantly’, ‘th’, ’towards’, ‘although’, ‘sixty’, ‘were’, ‘now’, “he’ll”, ‘containing’,
‘indicate’, ‘help’, ‘omitted’, ‘taking’, ‘below’, ‘onto’, ’shes’, ‘cd’, ‘ey’, ‘hereby’, ‘id’, ‘world’, ’0s′, ‘course’, ’ours’, ‘iv’, ‘reasonably’, ‘whereupon’, ‘nt’,
‘looking’, ‘ou’, ‘youd’, ’results’, ‘went’, ‘lc’, ’refs’, ‘particularly’, ‘dt’, “there’ll”, ‘rn’, ‘aj’, ‘throug’, ‘bi’, ’los’, ‘having’, ‘arise’, ‘necessarily’, ‘whim’,
‘our’, ‘pagecount’, ‘strongly’, ‘part’, ‘specify’, ‘ci’, ’ups’, ‘seeing’, ‘rr’, ‘r’, ‘tt’, ‘immediately’, ‘con’, “mustn’t", ‘og’, ‘under’, ‘while’, ‘each’, ’yes’, ‘c2’,
‘presumably’, ‘sq’, ‘sr’, “hadn’t", ‘per’, “c’mon”, ‘against’, ‘thin’, ‘rd’, “he’d", "when’s", ‘awfully’, ‘tn’, ‘cannot’, ’hers’, ‘i7’, ‘qj’, ‘soon’, ‘ef’, ‘tell’,
‘someone’, ‘shouldn’, ‘proud’, ‘cry’, ’ds’, ‘cj’, ‘bp’, ‘promptly’, ‘thereto’, ‘rc’, ’provides’, ‘tf’, "who’s", ‘eu’, ‘least’, ‘page’, ’pas’, ‘quickly’, ‘thank’, ‘sf’,
‘em’, ‘theyre’, ‘during’, ‘herein’, ’whats’, ‘why’, ‘yet’, ‘fj’, ‘wont’, ‘become’, ‘whole’, ‘outside’, ‘whoever’, ‘3a′, ‘on’, ‘cl’, ‘hereupon’, ’theirs’, ’them­
selves’, "let’s", ‘b2’, ‘me’, ‘beyond’, ‘dj’, ’this’, ‘i3’, ‘oz’, ‘bc’, ‘seemed’, ‘aside’, ‘oh’, ‘t2’, ‘ii’, ‘cg’, ‘somewhat’, ‘do’, ’indicates’, “ain’t", ‘got’, ‘cz’,
“needn’t", ‘nor’, ‘volumtype’, ‘obtained’, ‘q’, ‘rh’, ‘j’, ‘ah’, ‘insofar’, ‘known’, ‘lo’, ‘at’, ‘di’, ’ourselves’, ‘ff’, ‘inasmuch’, ‘sm’, ‘cf’, ‘fl’, ‘pp’, ‘rt’, ‘hasn’,
’happens’, ‘seven’, ‘up’, ‘whatever’, "what’s", ‘near’, ‘toward’, ‘cv’, ‘ignored’, ‘vq’, ‘accordingly’, ‘hu’, ‘rv’, ’still’, ‘even’, ‘gone’, ‘they’, ’ns’, ‘hed’,
‘name’, ‘qu’, “you’ll”, ‘da’, ‘nothing’, ‘predominantly’, ‘ir’, ‘iz’, ‘sl’, ‘ar’, ‘isn’, ‘fu’, ‘merely’, ‘possible’, ‘thoroughly’, ‘zero’, “she’ll”, ‘p’, ‘before’,
‘described’, ’nonetheless’, ’nevertheless’, ‘d’, ’does’, ‘poorly’, ‘similar’, ‘you’, ‘lb’, ‘that’, ’yourselves’, "where’s", ‘fifth’, ‘gj’, ‘any’, “isn’t", “i’ve”, ‘f2’,
‘od’, ’ones’, ‘potentially’, ’comes’, ‘tc’, ‘bill’, ‘wa’, ‘made’, ‘hardly’, ‘following’, ’whereas’, ‘ot’, ‘um’, ‘br’, ‘z’, ‘may’, ‘vo’, ‘mill’, ‘consequently’, ‘ic’,
‘behind’, ‘tp’, ‘allow’, ‘h2’, ‘followed’, ‘c1’, ‘important’, ‘recent’, ‘com’, ‘er’, ‘neither’, ‘date’, ‘nr’, ‘second’, ’others’, ‘have’, ’causes’, ‘else’, ‘ft’,
‘everything’, "a’s", ‘x2’, ‘mu’, “i’ll”, ‘ob’, ‘beforehand’, ‘rf’, ‘ought’, ‘cr’, ‘ran’, ‘fix’, ‘full’, ‘come’, ‘sd’, ‘thru’, ‘hr’, ‘above’, ‘k’, ‘empty’, ‘so’,
‘throughout’, ‘five’, ‘nine’, ‘ac’, “who’ll”, ‘ag’, ‘ln’, ‘until’, ‘whereby’, ’wheres’, ’es’, ’nos’, ‘yt’, ‘concerning’, ‘particular’, ’bs’, ‘nobody’, ‘bj’, ‘ko’,
‘much’, ’hs’, ‘moreover’, ‘primarily’, ‘few’, ‘further’, ‘related’, ‘hopefully’, ‘those’, ‘xv’, ‘pu’, ‘among’, ‘ap’, ‘furthermore’, ‘namely’, ‘ve’, ‘ga’,
‘affecting’, ‘some’, ‘xo’, ‘la’, ‘beginning’, ‘owing’, ‘upon’, ‘bl’, “shouldn’t", ‘them’, ‘tq’, ‘co’, ‘auth’, ‘usefully’, ‘give’, ‘somewhere’, ‘twelve’, "that’s",
‘due’, ‘apparently’, ‘already’, “what’ll”, ‘wherever’, ‘everybody’, ’contains’, ‘sj’, ‘him’, ‘hy’, ‘anyhow’, ‘ev’, ‘par’, ‘weren’, ‘normally’, ‘ain’, ‘cn’,
‘being’, ‘couldnt’, ‘x1’, ‘to’, ‘how’, ’was’, ‘like’, ‘td’, ‘oi’, ‘something’, ‘fill’, ‘ke’, ‘way’, ‘hasnt’, ’gs’, ‘dy’, ‘i’, ‘information’, ‘next’, ‘describe’, ‘call’,
‘one’, ’cs’, ‘placed’, ‘or’, ‘pq’, ‘however’, ’is’, ‘line’, ‘ru’, ‘be’, "c’s", "he’s", ‘ae’, ’needs’, ‘anybody’, ‘om’, ‘thereof’, ‘certainly’, ‘please’, ‘entirely’,
“we’d", ’theres’, ‘mightn’, ‘ad’, ‘amoungst’, ‘unfortunately’, ‘relatively’, ‘likely’, ‘index’, ‘between’, ‘begin’, ‘c3’, ‘forth’, ‘ih’, ‘sub’, ‘wonder’, ‘a2’,
‘alone’, ‘several’, ‘instead’, ‘significant’, ‘especially’, “couldn’t", ‘became’, ‘vd’, ’follows’, ’greetings’, ‘according’, ‘ij’, ‘showed’, ‘tb’, ‘ending’,
‘whereafter’, “we’re”, ‘af’, ‘exactly’, ‘n’, ‘otherwise’, ‘hi’, ‘meantime’, ‘indeed’, ‘nowhere’, “that’ll”, ‘cause’, ‘within’, ‘actually’, ’across’, ‘should’,
‘ten’, ‘somehow’, ‘would’, ’vs’, ‘i4’, ‘thereupon’, ‘old’, ‘s2’, ‘said’, ‘bn’, ’whos’, ‘ibid’, ‘again’, ’wants’, ’says’, ‘an’, ‘vu’, ‘clearly’, ‘w’, ‘hh’, ‘thorough’,
‘found’, ‘twice’, ‘tl’, ‘won’, ‘doesn’, ‘well-b’, ‘ed’, “hasn’t", ‘zi’, ‘nj’, ‘necessary’, ‘there’, ‘twenty’, ‘uk’, ‘fifteen’, ‘yr’, ‘po’, ‘gotten’, ’thanks’, ‘fr’, ‘whod’,
‘later’, ‘io’, ‘nay’, ‘ge’, ‘i2’, ‘brief’, ‘sometime’, "t’s", ‘va’, ‘oq’, ‘last’, ‘hid’, ‘tr’, ‘ho’, ‘dc’, ‘mainly’, ‘able’, "here’s", ‘nd’, ‘shall’, ‘nn’, ’shows’, ’begin­
nings’, ‘el’, ‘successfully’, ‘ui’, ‘will’, ‘ip’, ‘ce’, ‘itd’, ‘tm’, ‘available’, ’changes’, ‘c’, ‘accordance’, ‘readily’, ‘0o′, ‘xx’, ‘often’, ‘had’, ‘consider’, ‘ry’,
‘whenever’, ‘inward’, ‘taken’, ‘na’, ‘sure’, ‘wherein’, ‘jt’, ‘welcome’]

Appendix C. Variable Definitions

Variable Name Variable Measurement

Dependent Variables
1A_RATIOt Sustainability word count from Cannon et al. (2020) scaled by total word count for firm i’s Item 1A risk factor disclosure in year t. Stop words are removed from
the total Item 1A disclosure using the NLTK dictionary.
1A_RATIOt+1 Sustainability word count from Cannon et al. (2020) scaled by total word count for firm i’s Item 1A risk factor disclosure in year t+1. Stop words are removed
from the total Item 1A disclosure using the NLTK dictionary.
1A_RATIOt+2 Sustainability word count from Cannon et al. (2020) scaled by total word count for firm i’s Item 1A risk factor disclosure in year t+2. Stop words are removed
from the total Item 1A disclosure using the NLTK dictionary.
Δ1A_RATIO Change in 1A_RATIO from t+1 to t+2
ENV_SCORE Average monthly historical weighted environmental score for firm i’s fiscal year (either t, t+1, or t+2) from Sustainalytics, ranging from 0 (lowest) to 100
(highest).
SOC_SCORE Average monthly historical weighted social score for firm i’s fiscal year (either t, t+1, or t+2) from Sustainalytics, ranging from 0 (lowest) to 100 (highest).
GOV_SCORE Average monthly historical weighted governance score for firm i’s fiscal year (either t, t+1, or t+2) from Sustainalytics, ranging from 0 (lowest) to 100
(highest).
ΔENV_SCORE Change in ENV_SCORE from t+1 to t+2
ΔSOC_SCORE Change in SOC_SCORE from t+1 to t+2
ΔGOV_SCORE Change in GOV_SCORE from t+1 to t+2
Variables of Interest
AUD_RATIOt Sustainability word count from Cannon et al. (2020) scaled by total word count from PCAOB annually inspected audit firms’ official Twitter accounts in year t
AUD_RATIO_NLTKt Sustainability word count from Cannon et al. (2020) scaled by total word count from audit firms’ official Twitter accounts in year t after removing stop words
using the NLTK dictionary.
AUD_RATIO_GHBt Sustainability word count from Cannon et al. (2020) scaled by total word count from audit firms’ official Twitter accounts in year t after removing stop words
using the GitHub dictionary.
AUD_RATIO_TWEETt Ratio of sustainability tweets to total tweets from audit firms’ official Twitter accounts in year t. If a tweet contains at least one sustainability word from
Cannon et al. (2020), then the entire tweet is considered to contain sustainability communications.
ΔAUD_RATIO Change in AUD_RATIO from t+1 to t+2
IMPROVE One if the client firm switches to a new auditor whose AUD_RATIO is greater than the incumbent auditor, and zero if the client firm switches to a new auditor
whose AUD_RATIO is lower than the incumbent auditor
POST One if the client firm switches to a new auditor, and zero if one year before switching
(continued on next page)

26
M. Liu et al. Accounting, Organizations and Society xxx (xxxx) xxx

(continued )
Variable Name Variable Measurement

Auditor Characteristics
INDUSTRY_SPEC One if the auditor is a national industry specialist, and zero otherwise
BIG4 One if an auditor is a Big 4 audit firm, and zero otherwise
Control Variables
SIZE Natural logarithm of total assets in millions of dollars in year t
MTB Cash and short-term investments in year t, scaled by total assets at the beginning of year t
LEVERAGE Total liabilities divided by total assets at the end of year t
ROA Net income before extraordinary items in year t, scaled by total assets at the beginning of year t
CASHFLOW Operating cash flow divided by total assets for fiscal year t
LIQ Gross margin in year t
LOSS One if firm i reports a net loss in year t, and zero otherwise
GM Gross margin (COMPUSTAT SALE-COGS) scaled by SALE at fiscal year-end
ANN_RETURN Average annual stock returns in year t
ALTMANZ Altman Z score is calculated as: 3.107*(Net Income/Assets) + 0.998*(Sales/Assets) + 0.847*(Retained Earnings/Assets) + 0.717*(Working Capital/Assets) +
0.42*(Stock Price*Shares Outstanding)/Total Liabilities, following Altman (2000)
RESTRUCTURE One if firm i has restructuring activities in year t, and zero otherwise
IOR Percentage of institutional ownership
NUM_ANALYSTS Number of analysts following firm i in year t
LNAFEE The natural log of total audit fees for firm i in year t
ICMW One if firm i reported a Section 404 internal control weakness during fiscal year t, and zero otherwise
RESTATE One if the firm i announces a financial statement restatement during fiscal year t, and zero otherwise

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