How Do Institutional Pressures Reshape the Association Between Corporate Sustainability Disclosure and Firm Value in Emerging Economies? The Moderating Role of the Audit Committee Function

Mohannad Issa Elmanaseer and Ali Meftah Gerged

Business Strategy and the Environment, 2025, vol. 34, issue 6, 7253-7283

Abstract: This study examines the influence of normative (e.g., voluntary sustainability reporting guidelines) and coercive (e.g., mandatory corporate governance [CG] requirements) pressures on the relationship between corporate sustainability disclosure (CSD) and financial performance (FP), focusing on the moderating role of audit committee characteristics. Using 1863 firm‐year observations from 207 companies listed and unlisted on the Amman Stock Exchange (2014–2022), the study employs panel quantile regression and two‐stage PQR to address endogeneity issues. Results show that CSD adoption increased after the 2018 sustainability guidelines, positively affecting FP. Audit committee size and independence strengthen the CSD–FP link, particularly after the 2017 CG reforms, indicating coercive pressures' role in enhancing governance. However, frequent audit committee meetings and technical expertise may weaken the CSD–FP relationship. The study emphasizes governance frameworks shaped by normative and coercive pressures as key to maximizing the financial benefits of sustainability disclosures for firms.

Date: 2025
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