Examining the link between political connection and firm performance: the moderating effect of audit quality

Purpose The purpose of this paper is to examine the relationship between political connections, audit quality and firm performance. Design/methodology/approach The sample of this investigation was sourced from 51 industry-listed firms on the Amman Stock Exchange (ASE) from 2009 to 2022. Ordinary least squares regression was used to investigate the association between political connections, audit quality and firm performance. Generalized least squares estimation method was used to verify that the outcomes are robust. Findings The study finds that listed companies with political connections have better performance than those without such ties. The findings also suggest that politically connected firms would prefer higher-quality financial reporting and, hence, appoint Big 4 auditors. Originality/value To the best of the authors’ knowledge, this analysis is one of the first to explore the relationship between political connections, audit quality and firm performance in Jordan. By documenting the role of Big 4 auditor as a motivating factor for politically connected firms to enhance firm performance, this paper enriches the political connection and auditor choice literature.