Audit and Accounting Review

Quality of Audit and Financial Markets: Evidence from South Asian Economies

Danish Ali — 2025-12-31

We study the impact of Quality of Audit (QA) on Financial Markets (FM) in a group of South Asian Economies (SAEs) using panel dataset collected from World Economic Forum’s Global Competitive Index reports from 2006 to 2020. We estimated fixed effect regression as baseline model, and robustness is performed using robust fixed effect, Driscoll Kraay and PCSE, which are capable of correcting standard error issues associated with fixed effect regression. The results document a positive and significant role of QA in boosting FM in our sample. The study findings support the argument that QA may provide accurate and translucent financial reporting, lessen the asymmetry of information, and develop the confidence of investors. Investor confidence builds with transparent information which not only increases the investment opportunities but also increases the liquidity and stability of financial markets of SAEs. Improved QA helps to reduce the incidents of financial frauds and misstatements, and makes financial statements more reliable and trustworthy. Both domestic and international investors rely on audited financial statements, and it helps them make investment decisions, so it is the need of the businesses to enhance audit practices. The study has several limitations including the sample, the period tested, and data source. The results have implications for private and public institutes of SAEs, policymakers, government bodies, and financial institutions of SAEs, to apply for financial development. In our information, this is the foremost study investigating the direct effect of QA on FM in SAEs, and our results are robust across alternative estimators.

Exploring the Role of Fintech, Green Finance, and CSR on Environmental Performance with the Mediating Role of Green Innovation

Fareeha Waseem — 2025-12-31

This study aims to investigate the influence of green finance, corporate social responsibility, and fintech on the environmental performance of banks in the context of sustainability. Additionally, it seeks to examine the mediating role of green innovation. Primary data was collected using convenience random sampling through a structured questionnaire from 400 respondents working in the banking sector of Pakistan. Through multiple linear regression, it was found that CSR, green finance, and fintech adoption play a significant role in driving the banks’ environmental performance. Additionally, Hayes Process showed that green innovation significantly but partially mediated these relationships. The outcomes support the resource-based theory, implying that possessing and implementing strategic resources can boost the performance of banks and extend the application of the above theory in the realm of environmental sustainability. Banks and policymakers can also benefit from the results of this research.

Board Diversity and Corporate Outcomes: Evidence from Gender and Ethnic Heterogeneity in Pakistan’s Non-Financial Firms

Kashif Saeed — 2025-12-31

The essay relates to the influence that gender and ethnic heterogeneity have on the company boards regarding the elements of innovation, economic prosperity, and sound decision-making within the new markets. To address endogeneity and dynamic relationships balanced on a panel of non-financial listed firms in Pakistan Stock Exchange (PSX) over a period of four years (2015-23), we use the Generalized Method of Moments (GMM). Board Gender diversity increases financial performance, innovation, and decision-making. Ethnic heterogeneity improves creativity and diminished impact on financial performance, indicating that there is a slight coordination and communication issue within the diverse boards. These findings highlight the element of inclusive governance in Pakistan. The institutional and cultural context has a significant influence on the effectiveness of boards in Pakistan. This study adds to the literature about the diversity of the board, helping policymakers, regulators, and corporations to improve corporate governance and their competitiveness in the emerging markets in the long term by offering concrete evidence of the same.

Screening Strategies and Fund Type as Drivers of Socially Responsible Investment: Evidence from Asset Management Companies in Pakistan

Zahid Bashir — 2025-12-31

There has been a strong surge of socially responsible investment (SRI), globally. However, the adoption of such initiatives remains under investigated in the financial institutions (FIs) of vulnerable economies (e.g., Pakistan). More specifically, such contexts lack empirical evidence regarding the impact of screening strategies and fund type on SRI adoption. Therefore, the current research examines these factors for asset management companies (AMCs) as sampled FIs in Pakistan. For this purpose, unbalanced panel data (2008-2024) of 29 AMCs from Pakistan is collected. The estimation methods include static panel techniques such as fixed effects (FE), random effects (RE), and pooled ordinarily least square (OLS). The outcome variable is SRI ratio, while the input variables are SRI screening and fund types. Similarly, the control variables include firm size, return on equity (ROE), book to market (B/M) ratio, leverage, and environmental, social, and governance (ESG) score. The results indicate that positive screening and equity-based funds play a critical role in enhancing the SRI ratio in Pakistani AMCs. Moreover, fund type strengthens the impact of positive screening on SRI ratio for such AMCs. The findings related to positive screening and equity-based fund type support the application of the SRI theory. This result highlights a number of practical implications for regulators and fund managers in FIs. For example, policymakers should consider positive screening and promote equity-based SRI funds in their FIs. Finally, the findings of this study are novel due to addressing the problem in the under-examined context of a vulnerable economy like Pakistan.

Price Volatility and Financial Performance: Assessing the Impact of Food Prices on Pakistan’s Industrial Sector

Humera Iram — 2026-01-01

Food is a necessity for human survival; food price volatility has the potential to affect the household consumption pattern and, as a result, the firms' manufacturing decisions. This study aims to address this dimension of food price volatility, and it examines the impact of food price shocks on the demand and supply of 9 large-scale production industries of Pakistan. The study employs the Structural Vector Autoregressive Model to examine these impacts for monthly data from July 2008 to June 2023. The results of the study revealed that for some industries, like engineering, petroleum, rubber, and textiles, food prices lead to an increase in demand. These results show a contradiction to the general consumer behavior theory. However, for the automobile industry, this theory holds as food price shocks reduce the demand for automobiles. For industries like fertilizers, a positive food price shock boosts the supply mainly due to the use of fertilizer as an input in the food production process. This study addresses a novel dimension of the impact of food price shocks, and it provides a policy guideline to relevant stakeholders for accurate analysis of the impact of these shocks. It will help to address the stability issues of the manufacturing sector of Pakistan and economic development and stability.