Sustainability reporting is central to corporate transparency, especially in pharmaceuticals, where environmental, social, and governance (ESG) performance faces growing scrutiny. While earlier studies explored its effect on financial performance, this study examines the influence of audit quality on sustainability reporting practices and stakeholder perceptions in Nigeria’s listed pharmaceutical sector—a gap in prior research. Focusing on auditor size, industry specialization, and audit tenure, the study evaluates their impact on disclosure quality and perceived credibility. Covering a five-year period (2019–2023), data were sourced from audited annual and sustainability reports of six listed pharmaceutical firms in Nigeria. Regression analysis shows that all three audit quality indicators significantly enhance sustainability disclosure quality: auditor size (β = 0.421, p = 0.001), industry specialization (β = 0.327, p = 0.003), and audit tenure (β = 0.298, p = 0.008), with the model explaining 68.2% of the variance (R² = 0.682). Composite audit quality also significantly influences stakeholder perceptions of report credibility (β = 0.563, p < 0.001), accounting for 74.3% of the variance (R² = 0.743). These findings confirm that higher audit quality improves both the content and credibility of sustainability reports. The study recommends engaging reputable auditors, ensuring adequate audit tenure, and prioritizing industry expertise to strengthen sustainability reporting integrity. This approach fosters stakeholder confidence and advances ESG accountability within the healthcare sector in emerging economies.
Oyedare et al. (Tue,) studied this question.