I examine the spillover effects of the 2013 revision to the U.K. audit report standard, the International Standard on Auditing (ISA) 700 (UK and Ireland), from firms subject to the regulation (i.e., Premium companies listed on the London Stock Exchange (LSE)), to firms not subject to it (i.e., those listed on the Alternative Investment Market (AIM) of the LSE). The new regulation requires increased disclosures in three areas: audit risks, materiality and the scope of the audit. I hypothesize that application of the new rules to regulated clients will result in changes in audit styles and auditor mindsets that would be transferred to other (non-regulated) clients. If so, such effect of the new regulation on audit outcomes – specifically improvement in audit quality - for regulated clients will spill over to non-regulated clients. Because I expect the auditor to be the conduit for the spillover, I examine the difference in changes in audit quality for two groups: (1) AIM clients in audit offices that audit both Premium and AIM clients and (2) AIM clients in audit offices that audit only AIM clients. The results show that AIM firms in the first group (i.e., AIM clients of audit offices that also have Premium clients) experience lower absolute discretionary accruals, reduced propensity to have small positive earnings, and are more likely to receive a modified opinion under the new regulation. However, there is no change in audit quality for the AIM client firms of audit offices with only non-regulated (AIM) clients. These results are consistent with audit quality benefits spilling over from regulated clients to AIM clients, brought about by auditor-level changes. Further analyses indicate that the audit quality spillovers are more prominent for AIM clients with greater audit complexity, AIM clients of large audit offices, and London audit offices. / Business Administration/Accounting

Responsible investing is a growing concept as sustainability is becoming a much more apparent problem. Thus, the EU implemented a new regulation in 2021, the SFDR 2019/2088, to decrease information asymmetry between institutional investors and end investors regarding sustainable risks associated with funds’ investments. This thesis aims to study whether Swedish mutual funds are greenwashing in terms of funds that are classified as Article 9 funds and invest in firms with low ESG scores. I find that greenwashing occurs among some Swedish mutual funds classified as Article 9 funds, urging further actions to be taken by scholars, practitioners, and regulators given the complexity of the studied research field.

Sammanfattning Titel: “De skandinaviska fondbolagens kriterier på hållbarhetsfonder” Kurs: 2FE75E, Företagsekonomi III - Ekonomistyrning, Examensarbete (Kandidat) Författare: Ernest Dzogovic, Victor Ekerot & Hugo Fröding Handledare: Christer Foghagen Examinator: Petter Boye Lärosäte: Linnéuniversitet, Kalmar Nyckelord: Hållbarhet, Fond, Fondbolag, Taxonomi- och Disclosureförordningen, FN-mål, Kriterier; inkludera, exkludera & påverka.   Syfte: Syftet med studien är att undersöka varför de skandinaviska fondbolagen använder sig av olika kriterier för de aktier som ska inkluderas i deras hållbarhetsfonder.    Metod: Studiens data har insamlats genom att arbeta utefter en kvalitativ metod. Primärdata har inhämtats från de åtta respondenter som samtliga är aktiva inom fondbranschen. Sekundärdatan i studien härstammar från litteratur, vetenskapliga artiklar och webbplatser.   Teori: Teorin som ligger till grund för uppsatsen består av intressentmodellen, legitimitetsteorin, FN:s 17 globala utvecklingsmål för hållbar utveckling & ESG.    Empiri: Den insamlade empirin är baserad på intervjuer med personer verksamma inom fondbranschen och har kompletterats med hållbarhetsredovisningar samt ytterligare dokument från respektive fondbolag och lagar och förordningar.   Slutsats: Sammanfattningsvis anser vi att fondbolagen använder sig av olika kriterier till sina hållbarhetsfonder för att tillgodose sina intressenters efterfrågan, leva upp till samhällets förväntningar och bidra till klimatomställningen. Fondbolagen säkerställer att kriterierna efterföljs genom deras investeringsstrategier där de väljer att inkludera, exkludera eller påverka samtidigt som de inte investerar mer än 5% i kontroversiella sektorer. Samtliga av de Skandinaviska fondbolagen agerade efter liknande regelverk där det inte framgick några större skillnader mellan de olika. Däremot visade det sig finnas skillnader mellan statliga och kommersiella fondbolag. Slutligen anser samtliga medverkande respondenter att taxonomi- och disclosureförordningen kommer att bli omfattande för hela fondbranschen, men understryker att det ännu är i ett tidigt stadie då lagstiftningen inte är helt färdigställd. / Abstract Title: “The Scandinavian fund companies’ criteria for sustainability funds” Course: 2FE75E - Business Administration III - Management Accounting, Degree Project (Bachelor) Authors: Ernest Dzogovic, Victor Ekerot & Hugo Fröding Advisor: Christer Foghagen Examiner: Petter Boye Institution: Linnaeus University, Kalmar Key Words: Sustainability, Fund, Fund Company, Taxonomy and Disclosure Regulation, UN Objectives, Criteria; include, exclude & influence.   Purpose: The purpose of the study is to investigate why the Scandinavian fund companies use different criteria for the shares to be included in their sustainability funds.   Methodology: The study data has been collected by working according to a qualitative method. Primary data have been obtained from the eight respondents, all of whom are active in the fund industry. The secondary data in the study comes from literature, scientific articles and websites.    Theory: The theory on which the thesis is based consists of the stakeholder theory, the legitimacy theory, the UN’s 17 sustainable development goals & ESG.   Empirical: The collected empirical data is based on interviews with people active in the fund industry and has been supplemented by sustainability reports and additional research of documents from each fund company and laws and legislations.    Conclusion: In summary, we believe that fund companies use different criteria for their sustainability funds to meet the demand of their stakeholders, live up to society’s expectations and contribute to climate change mitigation and adaptation. Fund companies ensure that the criteria are met through their investment strategies where they choose to include, exclude or influence while not investing more than 5% in controversial sectors. All of the Scandinavian fund companies acted according to similar regulations where no major differences were observed between them. However, it turned out that there are differences between state and commercial fund companies. In conclusion, all participating respondents believe that the taxonomy and disclosure regulation will be comprehensive for the entire fund industry, but emphasize that it is still at an early stage when the legislation is not fully completed.

The Non-Financial Reporting Directive (“NFRD”),[1]is an important contributor to the European Union’s (EU) goal of creating a more sustainable future for all. By requiring large public-interest entities to report non-financial information relating to sustainability matters, the NFRD increases business transparency and gives stakeholders the opportunity to make more informed investment decisions, monitor corporate activities and initiate discussions based on current practices. The purpose of this thesis is to analyze the NFRD as it stands today and to analyze in what way the NFRD has the potential to improve by chiefly using the legal dogmatic method. The thesis reached its completion with an appropriate timing (January 2021) as the EU has announced its ambition to revise the NFRD by the first quarter of 2021. The conclusion drawn is that the NFRD should be revised on a series of points. Most importantly, reliability of the provided information should be secured through a stronger verification mechanism. Other areas for improvement concern the enlargement of the scope of the NFRD and the implementation of further measures securing comparable data.  [1]Directive 2014/95/EU.