Audit committee characteristics and environmental, social, and governance reporting quality: An analysis of top 100 JSE-listed corporations

Abstract

Type of the article: Research ArticleAudit committees are key in corporate reporting, ensuring credibility through internal controls, assurance processes, and risk management. This study examines the relationship between audit committee characteristics and Environmental, Social, and Governance reporting quality among the top 100 Johannesburg Stock Exchange-listed corporations. Using agency and legitimacy theories, the study analyzes how audit committees serve as mechanisms for lowering information asymmetries and attaining legitimacy through transparent Environmental, Social, and Governance reporting. It focuses on three audit committee attributes: independence, meeting frequency, and average age. Panel data regression models using Ernst & Young’s Excellence in Integrated Reporting Awards were used. Data were obtained from the Bloomberg database spanning five years (2017–2021). The results reveal a significant positive correlation between Environmental, Social, and Governance reporting quality and audit committee independence (p-value < 0.05), but no significant relationship for meeting frequency or average age (p < 0.05). The findings highlight the importance of internal assurance in enhancing Environmental, Social, and Governance reporting, addressing stakeholder concerns on sustainability and corporate responsibility. The study contributes to the governance literature by offering actionable insights for firm managers and evidence that stronger audit committee independence enhances governance structures. This study underscores the need for policies that improve Environmental, Social, and Governance reporting quality and suggests further exploration of qualitative audit committee attributes influencing Environmental, Social, and Governance disclosures. It added to the ongoing debate examining the effect of audit committee characteristics on Environmental, Social, and Governance reporting quality in South Africa’s context.Acknowledgment Gratitude is extended to the anonymous referees for their helpful and thoughtful suggestions, recommendations, and constructive comments, by which the paper was substantially improved. Moreover, the University of KwaZulu Natal is acknowledged for providing excellent research support and facilities. Notably, the article has never been published previously. The paper was extracted from Ruth Mutsa Ruziwa’s Masters dissertation, which was submitted to the University of KwaZulu Natal, with first authorship of this article attributed to the same.