The influence of audit committee characteristics and audit quality on ESG performance with sustainable growth rate as a moderation variable

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Abstract

This study examines the impact of audit committee characteristics and audit quality on environmental, social, and governance (ESG) performance, with the sustainable growth rate (SGR) serving as a moderating variable. Previous studies have highlighted the importance of corporate governance mechanisms such as audit committees to ESG disclosure and performance (Pozzoli et al., 2022; Arif et al., 2021). However, higher audit quality can also improve the transparency and credibility of ESG reporting, as previous studies have shown (Del Giudice & Rigamonti, 2020; Zahid et al., 2022). Secondary data from 147 ASEAN-5 listed companies from 2019 to 2023 were used. A purposive sampling approach was adopted, and multiple regression alongside moderation was used to test the variables for this research. This study found that audit committee size, independence, and frequency improve ESG performance. However, committee financial knowledge and audit quality do not improve ESG performance. Additionally, ESG performance is negatively correlated with the sustainable growth rate. This study also reveals that the sustainable growth rate can strengthen the favorable association between audit committee meeting size and frequency, audit quality, and ESG performance. A possible non-linear link between the sustainable growth rate and moderating impact requires further investigation.

Keywords: ESG, Audit Committee Characteristics, Audit Quality, Sustainable Growth Rate

Authors’ individual contribution: Conceptualization — T.S. and H.K.N.; Methodology — T.S. and H.K.N.; Software — T.S. and H.K.N.; Validation — T.S. and H.K.N.; Formal Analysis — T.S. and H.K.N.; Investigation — T.S. and H.K.N.; Resources — T.S. and H.K.N.; Data Curation — T.S. and H.K.N.; Writing — Original Draft — T.S. and H.K.N.; Writing — Review & Editing — T.S. and H.K.N.; Visualization — T.S. and H.K.N.; Supervision — T.S.; Project Administration — T.S.; Funding Acquisition — T.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, M14, M42, Q56

Received: 03.01.2025
Revised: 31.03.2025; 28.04.2025; 24.06.2025
Accepted: 27.06.2025
Published online: 01.07.2025

How to cite this paper: Sihombing, T., & Nurhaliza, H. K. (2025). The influence of audit committee characteristics and audit quality on ESG performance with sustainable growth rate as a moderation variable. Corporate Governance and Sustainability Review, 9(3), 45–54. https://doi.org/10.22495/cgsrv9i3p3