The joint influence of digital adoption in corporate governance and its impact on external assurance is a critical and emerging nexus in the literature concerning auditing and technological innovation, especially in volatile markets. Building on agency theory and resource dependence theory, this study investigates the nexus between corporate digital transformation (DT) and audit quality (AQ), while examining the moderating role of AC characteristics—specifically size, gender diversity, expertise, and activity—within the Egyptian context. Utilizing a sample of 120 non-financial firms listed on the Egyptian Exchange (EGX) from 2022 to 2024 (360 firm-year observations), the analysis employs Robust Least Squares (M-estimation) and Panel EGLS to ensure resilience against outliers and heteroscedasticity. The empirical findings provide robust evidence that digital transformation significantly enhances audit quality by constraining discretionary accruals, supporting the premise that technological integration improves monitoring and transparency. Moreover, the results reveal that the audit committee acts as a pivotal positive moderator, strengthening the digitalization-audit quality relationship; this impact is most pronounced in firms with larger, more gender-diverse, and financially expert audit committees. While audit committee activity shows a reactive correlation with accruals, its interaction remains essential for continuous monitoring in digital environments. Ultimately, this study offers novel insights for regulators and firms in emerging economies, highlighting that the benefits of technological adoption in financial reporting are maximized only when complemented by robust internal governance mechanisms, necessitating simultaneous investment in digital infrastructure and the fortification of audit committee attributes to ensure sustained audit market efficiency.
Elsayed et al. (2026) studied this question.