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<p>As ESG reporting becomes more essential in banking, this study explores the association between “Earnings Management (EM)” and ESG scores, using EM as a proxy for “Corporate Governance (CG)” efficacy. It assumes improved audit quality moderates EM’s effect on ESG disclosures. “A balanced panel” of 16 Jordanian banks from 2010 to 2024 is used. We use a modified ESG disclosure index from earlier studies. Hypotheses are tested using “clustered OLS regressions with fixed effects, robustness tests, and dynamic panel GMM”. EM and ESG disclosure scores are positively correlated across environmental, social, and governance dimensions. EM’s impact on ESG disclosures is moderated by audit quality, therefore higher audit quality lessens EM’s influence on sustainability reporting. Regulators, policymakers, and stakeholders can apply the insights to improve audit oversight and CG frameworks for ESG transparency and manipulation prevention in emerging countries. New empirical evidence shows how audit quality affects the link between EM and ESG reporting in poor countries. It helps explain the complex relationship between governance processes and sustainability disclosure in emerging economies like Jordan.</p>

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Audit quality moderating effect on the relationship between earnings management and ESG reporting in the Jordanian banking industry

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2025年9月30日

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  • Esraa Esam Alharasis,
  • Sajead Mowafaq Alshdaifat,
  • Taha Almarayeh,
  • Elina F. Hasan,
  • Radhi Al-Hamadeen

摘要

As ESG reporting becomes more essential in banking, this study explores the association between “Earnings Management (EM)” and ESG scores, using EM as a proxy for “Corporate Governance (CG)” efficacy. It assumes improved audit quality moderates EM’s effect on ESG disclosures. “A balanced panel” of 16 Jordanian banks from 2010 to 2024 is used. We use a modified ESG disclosure index from earlier studies. Hypotheses are tested using “clustered OLS regressions with fixed effects, robustness tests, and dynamic panel GMM”. EM and ESG disclosure scores are positively correlated across environmental, social, and governance dimensions. EM’s impact on ESG disclosures is moderated by audit quality, therefore higher audit quality lessens EM’s influence on sustainability reporting. Regulators, policymakers, and stakeholders can apply the insights to improve audit oversight and CG frameworks for ESG transparency and manipulation prevention in emerging countries. New empirical evidence shows how audit quality affects the link between EM and ESG reporting in poor countries. It helps explain the complex relationship between governance processes and sustainability disclosure in emerging economies like Jordan.