Using a sample of banks from 36 countries, we document that accounting enforcement is negatively related to bank risk-taking. We also provide evidence that accounting enforcement enhances bank stability during the crisis. In addition, we show that banks assume less risk through more conservative lending decisions and a reduction in complexity in jurisdictions with higher accounting enforcement. Our results show that formal institutions such as accounting enforcement are associated with bank financial decisions and risk-taking behavior.

We examine whether the joint provision of corporate social responsibility (CSR) assurance services and financial audit by the same audit firm influences auditors' assessment of going‐concern risk. We predict that the provision of CSR assurance and financial audit by the same audit firm creates CSR‐related knowledge spillovers from the CSR assurance team to the financial audit engagement team, which helps in the auditor's assessment of going‐concern risk. Using more than 28,000 firm‐year observations from 55 countries, we document that, relative to audit firms that provide only the financial audit, audit firms that provide both CSR assurance and financial audit for the same client (i) issue more frequent going‐concern opinions and have lower Type II going‐concern errors, (ii) have clients that book larger environmental and litigation provisions, (iii) report earnings that are more persistent and value‐relevant and are less likely to book income‐decreasing earnings restatements, and (iv) do not charge higher audit fees or total fees. Our results are important especially because of firms' increasing exposure to CSR risks and the growing number of countries that require assurance of CSR reports.