Audit Quality, Digital Transformation, Firm Performance, and Sustainability Performance: Evidence from the Financial Sector Listed on the Indonesia Stock Exchange (IDX)

Audit quality and digital transformation are increasingly important determinants of corporate performance and sustainability in the financial sector. This study investigates their effects on firm performance and sustainability performance among financial sector companies listed on the Indonesia Stock Exchange during 2020–2024, with firm performance examined as a potential mediator. Using panel data from 17 companies selected through purposive sampling, the analysis employs panel data regression and the Sobel test, with firm performance measured by Return on Assets (ROA) and Price-to-Book Value (PBV). The findings reveal differentiated effects across performance indicators. Audit quality positively affects ROA but has no significant effect on PBV, while digital transformation has no significant effect on ROA and negatively affects PBV. Audit quality also has a significant negative effect on sustainability performance, whereas digital transformation shows no significant effect. Neither ROA nor PBV significantly influences sustainability performance, and firm performance does not mediate the relationships between audit quality, digital transformation, and sustainability performance. These results indicate that improvements in profitability and technological adoption do not automatically translate into enhanced sustainability outcomes. The findings highlight the need for financial sector firms to integrate audit practices and digital transformation with explicit sustainability-oriented strategies rather than relying on operational or financial improvements alone.