Polarization in sustainability disclosure: the role of accounting structural deviation and its impact on firm value and audit fees

Purpose This paper aims to investigate the financial consequences of sustainability disclosure polarization, conceptualized as the structural departure of a firm’s reporting practices from industry norms toward opposite extremes. It aims to determine how polarization impacts firm value and audit fees and to unpack the underlying mechanisms of uncertainty and the effectiveness of the audit committee (AC) in an emerging market region. Design/methodology/approach Adopting a quantitative approach, this study analyzes a panel dataset of 2,235 firm-year observations from listed companies across major ASEAN economies. Structural equation modeling is used to test a moderated-mediation framework. This methodology examines the complex pathways linking polarization to firm value and audit fees, accounting for country-specific heterogeneities and proxy sensitivity. Simultaneously, it assesses the contingent effects of uncertainty and AC effectiveness. Findings The results reveal a non-linear, inverted U-shaped relationship between the level of disclosure polarization and firm value, suggesting an optimal point of strategic differentiation exists. The study finds that disclosure polarization is positively associated with higher audit fees. These relationships are significantly mediated by environmental uncertainty, although these main effects exhibit conditionality across different national contexts within the region. Furthermore, the effectiveness of the AC is found to negatively moderate (weaken) the adverse impact of polarization on audit fees. Practical implications The findings offer actionable insights for managers to pursue an optimal, rather than maximal, disclosure strategy focused on quality to enhance firm value and control costs. For boards, it highlights the tangible financial benefit of investing in an effective AC. For ASEAN regulators, it suggests that policy should prioritize disclosure quality and comparability over mere quantity to foster market confidence. Originality/value By empirically operationalizing disclosure polarization through the structural deviation of reporting quality and governance from industry medians, this research moves beyond simplistic linear views of sustainability reporting. It contributes an integrated empirical model explaining both valuation and cost consequences through the dual lenses of external uncertainty and internal governance. The findings offer actionable insights for managers on optimizing disclosure quality and for regulators on fostering market confidence in emerging economies.