The Role of Company Size on the Relationship Between Corporate Social Responsibility, Audit Quality, and Firm Performance

Abstract

This study explores the impact of corporate social responsibility (CSR) practices and audit quality (AQ) on the financial performance of non-financial firms in Pakistan, also considering how company size may act as a moderator. CSR disclosure was assessed using a checklist covering social, environmental, and governance aspects, while for audit quality, a dummy variable is used. The study relies on panel data from 2021 to 2024. The performance is measured using Return on Equity (ROE). The study employed pooled OLS and fixed effects regression models to account for firm-specific differences. Findings of the study indicate that higher levels of corporate social responsibility (CSR) disclosure and audit quality are significantly positively linked to better firm performance and play a very important role in enhancing reputation, governance, and stakeholder trust. Conversely, the relationship between firm size and performance is significant and negative, suggesting that larger firms may be less efficient and that size can diminish resource advantages. This research adds to governance and sustainability discussions by providing specific evidence from Pakistan and offering valuable insights to policymakers, corporate leaders, and investors.