Moderating role of audit quality in the relationship between ESG performance and corporate capital financing dynamics: A Case Study of Iran

This study investigates the relationship between environmental, social, and governance (ESG) performance and corporate capital financing dynamics, while also examining the moderating role of audit quality in this relationship. Firms with stronger ESG performance are expected to reduce information asymmetry and perceived risk, thereby improving their financing conditions and influencing their capital financing decisions. The study adopts an applied research approach with a descriptive–correlational design. ESG performance is measured using the weighted disclosure method developed by Fakhari et al. (۲۰۱۷), which evaluates the extent of ESG-related information disclosed in firms’ board reports. Audit quality is proxied by auditor size; following Khani and Rajab-Dari (۲۰۲۱), a dummy variable is used that takes the value of one if the firm is audited by the Audit Organization and zero otherwise. The statistical population consists of companies listed on the Tehran Stock Exchange, from which a sample of ۱۴۳ firms was selected for the period ۲۰۱۳–۲۰۲۲. The research hypotheses were tested using panel data and pooled regression models estimated through the EGLS method in EViews. The empirical results reveal a positive and statistically significant relationship between ESG performance and corporate capital financing dynamics. Moreover, audit quality positively moderates this relationship, indicating that higher-quality auditing enhances the credibility of ESG disclosures and mitigates opportunistic managerial behavior. These findings highlight the importance of ESG practices and robust auditing mechanisms in improving firms’ financing conditions. However, the results should be interpreted with caution due to limitations related to ESG data availability and measurement challenges in emerging markets.

کلیدواژه ها:

Dynamics of capital financing ، Environmental ، social and governance performance ، Audit Quality