Purpose This study investigates: (1) the mediating role of intellectual capital (IC) in the relationship between environmental, social and governance (ESG) disclosure and financial performance (FP) and (2) the moderated mediation effects of audit quality in the unique setting of Association of Southeast Asian Nations (ASEAN) firms. Design/methodology/approach Using a panel of 590 non-financial listed firms in ASEAN over the period 2014–2023, this study employs generalized structural equation modeling (GSEM) with lagged independent variables to examine moderated mediation effects. Two-step system generalized method of moments (GMM) estimation is conducted as a robustness check. ESG scores are sourced from both Refinitiv and Bloomberg databases. IC is measured primarily by the modified value added intellectual coefficient (MVAIC) model, while FP is assessed through multiple market- and accounting-based indicators. Findings Results consistently show that ESG scores and IC enhance financial outcomes, albeit ESG produces a negative effect on IC. Further, audit quality strengthens the overall mediating mechanism by reinforcing the transmission of IC into FP, while its moderating effect on the direct ESG–FP relationship remains inconclusive. Originality/value This study offers novel evidence by modeling IC as a mediator and audit quality as a moderator of the indirect ESG–FP link in ASEAN listed firms. Our research validates conditional indirect effects, reveals resource trade-offs and highlights governance–strategy alignment for maximizing sustainable FP.
Truong et al. (Tue,) studied this question.