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<p>This research investigates the moderating role of audit quality on the association of ESG performance with firm performance in Jordan and Saudi Arabia, with the help of Tobin’s Q and market-to-book ratios. Panel data over the period 2016–23 for 398 firm-year observations (126 from Jordan and 272 from Saudi Arabia) is examined, applying robust econometric models for mitigating the problems of endogeneity and sample selection bias. The results suggest that the low audit quality mitigates the positive effect of ESG scores on firm performance in Japan and China. Saudi Arabia is more resilient, as it has a more robust environment and institutional framework, while authorities in Jordan need to convert their efforts in ESG into financial returns. This study adds to the literature by presenting audit quality as an important tool through which the value of ESG investment can be realized in developing countries. With constraints due to data availability and remaining endogeneity issues, the study underscores the willingness or capacity of regulatory and oversight frameworks to impact the ESG-motivated performance as discussed in the main text. The findings have implications, because if audit mechanisms are strengthened, ESG-related value creation is likely improved, and policymakers are supported.</p>

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Does audit quality moderate the relationship between ESG and firms performance in Jordanian and Saudi markets

  • 期刊论文

  • 发表日期：

    2025年12月29日

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  • Shaher Falah Alroud,
  • Ahmad Ali Salem Bawaneh,
  • Amjad Jameel Al-Shorafa,
  • Yazan Oroud

摘要

This research investigates the moderating role of audit quality on the association of ESG performance with firm performance in Jordan and Saudi Arabia, with the help of Tobin’s Q and market-to-book ratios. Panel data over the period 2016–23 for 398 firm-year observations (126 from Jordan and 272 from Saudi Arabia) is examined, applying robust econometric models for mitigating the problems of endogeneity and sample selection bias. The results suggest that the low audit quality mitigates the positive effect of ESG scores on firm performance in Japan and China. Saudi Arabia is more resilient, as it has a more robust environment and institutional framework, while authorities in Jordan need to convert their efforts in ESG into financial returns. This study adds to the literature by presenting audit quality as an important tool through which the value of ESG investment can be realized in developing countries. With constraints due to data availability and remaining endogeneity issues, the study underscores the willingness or capacity of regulatory and oversight frameworks to impact the ESG-motivated performance as discussed in the main text. The findings have implications, because if audit mechanisms are strengthened, ESG-related value creation is likely improved, and policymakers are supported.