Lecture 5

Question 1

What is the difference between internal auditors and external auditors

Answer 1

Internal auditors: work inside the organization & reduce agency costs

External auditors: appointed by shareholders & reduce info gaps

Question 2

Name an advantage & disadvantage of external auditors.

Answer 2

Advantage -> independent
Disadvantage -> Difficult to obtain sensitive data

Question 3

What are key users of ESG ratings?

Answer 3

1. Institutional investors
2. CEOs
3. Academics

Question 4

What is the difference between single and double materiality?

Answer 4

Single materiality: how the environment affects the company

Double materiality: how the environment affects the company and how the company affects the environment

Question 5

Why do ESG rating agencies have conflicts of interests sometimes?

Answer 5

They sell ESG ratings to institutional investors

Question 6

Why do countries with better law and enforcement have better functioning financial markets?

Answer 6

Because laws and regulation are the corner stone of financial markets

Question 7

What are the benefits of femal leadership?

Answer 7

1. More cooperative
2. Less risk-taking
3. Emotional support
4. Higher ethical standards