External Audit Quality, Audit Committee Characteristics, and Financial Reporting Quality: Evidence in the Context of Sustainability and Ai-Driven Corporate Governance

Abstract

This study investigates how audit committee characteristics—independence, size, and financial expertise—affect financial reporting quality, while examining the moderating role of external audit quality within an emerging environment emphasizing sustainability and AI-enabled oversight. Using data from 35 industrial firms listed on the Amman Stock Exchange between 2020 and 2024, the study applies multiple regression analysis to test the hypothesized relationships. Results show that audit committee independence, size, and financial expertise enhance financial reporting quality. External audit quality strengthens these relationships, indicating its importance in reducing discretionary accruals. Integrating sustainability reporting expectations and AI-supported monitoring further illustrates the growing demand for transparency. The study provides novel evidence from the Jordanian industrial sector by combining traditional governance mechanisms with sustainability and AI-related considerations.