The Moderating Role of Audit Quality in The Relationship Between Corporate Sustainability Disclosure and Firm Performance

Abstract

This study examines the moderating role of audit quality in the relationship between corporate sustainability disclosure and firm performance. The increasing importance of environmental, social, and governance (ESG) information has encouraged firms to provide more transparent disclosures regarding their sustainability practices. However, prior studies have reported inconsistent findings regarding the extent to which sustainability disclosure contributes to financial performance and firm value. This study employs a systematic literature review (SLR) approach to synthesize empirical and conceptual evidence concerning corporate sustainability disclosure, audit quality, and firm performance. Relevant literature was identified and analyzed using a structured review process guided by the PRISMA framework, with thematic analysis applied to identify patterns and relationships across studies. The findings indicate that sustainability disclosure generally has a positive relationship with firm performance by improving transparency, reducing information asymmetry, strengthening stakeholder confidence, and enhancing corporate reputation. More importantly, the literature suggests that audit quality strengthens this relationship by increasing the credibility and reliability of sustainability-related information. High-quality audits can therefore enhance the economic value of sustainability disclosure. The study concludes that audit quality represents an important governance mechanism that determines the effectiveness of corporate sustainability disclosure in improving firm performance.