The Importance of Carbon Intensity and the Moderating Role of Female Auditors on Audit Hours

Document Type : Original Article

Authors

1 MSc. Of Auditing, Faculty of management, University of Tehran, Tehran, Iran.

2 Instructor, Department of Accounting, Farvardin Qaemshahr Institute of Higher Education, Qaemshahr, Iran

3 Instructor, Department of Accounting, Technical and Vocational University (TVU), Tehran, Iran

Abstract

Objective: This study investigates the effect of firms’ carbon intensity on audit hours and examines the moderating role of female auditors. As environmental issues have become increasingly salient and institutional as well as societal pressures for greenhouse gas disclosure and the adoption of sustainability reporting have intensified, it is essential to determine whether firms with higher carbon intensity demand greater audit effort. Furthermore, prior literature suggests that female auditors exhibit greater conservatism, higher precision, and stronger risk aversion in professional judgment and decision-making. Examining their moderating role in the presence of risks associated with carbon-related disclosures can offer deeper insights into the mechanisms shaping audit effort in Iran’s capital market and contribute to filling an existing gap in the domestic literature.
Methods: The sample comprises 104 publicly listed firms on the Tehran Stock Exchange during the period 2018–2023. Data were collected using purposive sampling and analyzed through multiple linear regression models. To control for structural and temporal effects and mitigate potential bias arising from industry or year differences, industry and year fixed effects were included in the models. Audit hours were specified as the dependent variable, carbon intensity as the independent variable, and the presence of female auditors (at partner or senior auditor level) as the moderating variable. Control variables included firm size, profitability, operational complexity, financial leverage, and other environmental factors to enhance model accuracy and the generalizability of the findings.
Results: Empirical results indicate that carbon intensity has a positive and statistically significant effect on audit hours. Specifically, firms with higher greenhouse gas emissions or voluntary carbon disclosures require greater audit effort due to increased information complexity, more extensive verification procedures, potential environmental liabilities, and litigation risks. Moreover, the presence of female auditors strengthens this relationship; female auditors allocate additional audit hours, exhibiting greater caution, diligence, and risk-aversion when auditing carbon-related disclosures. These findings align with international research on gender differences in auditing, indicating that female auditors are more sensitive to material misstatements and apply more rigorous evidence-gathering and verification procedures.
Conclusion: This research shows that disclosure of carbon-related information, in addition to affecting audit risk assessment, significantly increases audit effort and audit hours. The moderating role of female auditors also indicates the importance of auditors’ individual and gender characteristics in professional judgment and the intensity of audit efforts. These results have important implications for audit firms, regulatory bodies, and policymakers in designing audit processes, allocating human resources, and enhancing transparency and the quality of financial reporting.
Innovation: This study is among the first to examine, in the Iranian capital market, the relationship between carbon intensity and audit hours while considering the moderating role of female auditors. The findings not only enrich the auditing and sustainability reporting literature but also provide practical and strategic guidance for audit firms and policymakers, emphasizing the significance of leveraging female auditors’ capacity in addressing environmental risks and the complexities of financial reporting.

Keywords

References

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Journal of Finance and Corporate Sustainability
Volume 1, Issue 2 - Serial Number 2
February 2026
Pages 196-225

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History

  • Receive Date: 22 November 2025
  • Revise Date: 15 February 2026
  • Accept Date: 21 February 2026
  • First Publish Date: 21 February 2026
  • Publish Date: 21 January 2026

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