ESG Performance and Audit Quality: Bidirectional Relationship and the Moderator Role of Gender Diversity in an International Context
Year: 2026
Type: article
Abstract: ABSTRACT This study examines the bidirectional relationship between environmental, social, and governance (ESG) performance and audit quality and the moderating role of board gender diversity. Using an international sample of 3630 firm‐year observations over 2017–2022, we estimate System GMM and generalized structural equation models. Audit quality is measured using audit fees and audit opinions. The results indicate that ESG performance is negatively associated with audit fees, whereas the reverse relationship is insignificant. This negative association extends to all three ESG pillars. ESG performance is unrelated to audit opinion in the full sample, but the association is positive for low‐ESG firms and negative for high‐ESG firms. By contrast, unmodified audit opinions are negatively associated with ESG performance and with all three ESG pillars. Board gender diversity moderates both directions of the ESG–audit fee relationship, attenuating the negative associations as female representation increases. For audit opinions, moderation occurs only from ESG performance to audit opinion. Overall, the findings reveal substantial heterogeneity across audit‐quality measures, ESG profiles, and board composition.
DOI: 10.1002/csr.71150
Authors: Azhaar Lajmi, Marjène Rabah Gana, Ghada Kacem
Institutions: Tunis University, HEC Montréal, École de Technologie Supérieure
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W7225429862