The Impact of Environmental, Social and Governance Performance on the Quality of Financial Reporting Emphasis on Product Market Competition

Authors

  • Saeed Noormohammadi * Department of Accounting, Shams Institute of Higher Education in Science and Technology, Tabriz, Iran.

https://doi.org/10.22105/tqfb.v2i3.71

Abstract

Environmental, social and governance performance, as one of the key axes of Corporate Social Responsibility (CSR), plays an important role in improving the transparency and quality of financial reporting. However, product market competition may affect the sustainability performance of companies. The aim of this study is to investigate the effect of environmental, social and governance performance on the quality of financial reporting, emphasizing the moderating role of managerial myopia in companies listed on the Tehran Stock Exchange. The research data includes financial and non-financial information of 120 companies in the period 2019-2024, which were analyzed using the mixed data method and Eviews software. The results show that higher environmental, social and governance performance is significantly associated with improved financial reporting quality. Thus, improved sustainability reporting improves the quality of accounting reports. Furthermore, the results showed that increased product market competition weakens the positive relationship between Environmental, Social, and Governance (ESG) performance and financial reporting quality. These findings are consistent with agency and legitimacy theories and highlight the importance of simultaneously addressing sustainable development and improving managerial behaviors. The limitations of Iran’s institutional environment, including weak corporate governance and economic volatility, may limit the generalizability of the results. This study emphasizes that to improve the quality of financial reporting, companies should pay attention to issues related to product market competition in addition to increasing ESG performance.  

Keywords:

Financial reporting quality, Environmental and social performance, Product market competitiveness

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Published

2025-06-15

Issue

Vol. 2 No. 3 (2025): Transactions on Quantitative Finance and Beyond

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Articles

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How to Cite

Noormohammadi, S. (2025). The Impact of Environmental, Social and Governance Performance on the Quality of Financial Reporting Emphasis on Product Market Competition. Transactions on Quantitative Finance and Beyond, 2(3), 189-202. https://doi.org/10.22105/tqfb.v2i3.71
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