The ESG−audit nexus: unpacking the mediating role of CSR strategy and contextual moderators

Abstract

This research aims to investigate the impact of environmental, social and governance (ESG) scores on the likelihood of conducting sustainability audits. In this context, the mediating role of corporate social responsibility (CSR) strategy and the moderating roles of company size and systematic risk are considered. This study used panel data from 168,198 firm-year observations. A positive and significant relationship was found between the overall ESG score and the likelihood of conducting sustainability audits. Additionally, the mediating role of the CSR strategy was confirmed, indicating that formalized CSR commitments facilitate the translation of ESG performance into sustainability audits. Moreover, company size and systematic risk, as moderating variables, strengthened the aforementioned relationship. This study integrates and extends institutional theory (focusing on external pressures for ESG) and strategic choice perspective (focusing on internal CSR strategy) to explain corporate behavior. This theoretical triangulation provides a more nuanced explanation than single-theory studies, revealing CSR strategy as the critical linchpin translating external ESG pressures into formalized audit and assurance practices.