Nonlinear Relationship Between Audit Quality and ESG Performance in Insurance Companies: New Evidence from the MENAT Region

This study examines the nonlinear connection between audit quality and insurance firm ESG performance based on a sample of 31 MENAT-region insurance companies from 2017 to 2022. Based on a fixed-effect model and quadratic regression, the main results support the presence of a curvilinear nexus between audit quality and ESG performance of insurance companies. This correlation shifts from positive to negative when it reaches a level of 51,7%. Given this, insurers and regulatory bodies should adjust audit quality to a balanced point where it optimizes ESG performance without excesses that would be needlessly costly and have reverse effects. Policy wise, proportionate rules should be established for the inclusion of ESG considerations in auditing, to prevent over-regulation and to achieve a balance between control and performance.