An Examination of the Inhibitory Effect of Internal Audit Quality on Corporate ESG Bleaching Green Behavior

Abstract

With the popularization of the ESG concept worldwide, corporate ESG disclosure has become an important basis for the capital market to evaluate the sustainable development ability of enterprises. However, in order to obtain market recognition and financing convenience, some enterprises disclose ESG information in a false, exaggerated or one-sided manner, i.e., ESG “greenwashing” behavior, which seriously damages the information efficiency and resource allocation function of the capital market. As an important part of the internal governance mechanism, the quality of internal audit directly affects the authenticity and reliability of corporate disclosure. Based on the connotation, manifestation and generation mechanism of ESG, this paper systematically analyzes the theoretical logic and mechanism of internal audit quality to inhibit ESG behavior from the three dimensions of supervisory function, evaluation function and consulting function, and puts forward the practical paths and policy suggestions to strengthen the construction of internal auditing and to prevent the risk of ESG behavior. The study concludes that high-quality internal auditing can effectively inhibit ESG greenwash by enhancing information verification, reducing agency costs, and promoting substantive ESG actions, and is an indispensable internal governance force for the construction of an ESG disclosure integrity system.