Sakhr M. Bani-Khaled

Type of the article: Research Article

Abstract
This study investigates how corporate governance (CG) shapes financial reporting quality in Jordanian banks and whether audit quality mediates this relationship. Motivated by persistent agency challenges and evolving regulatory expectations in emerging markets, the research examines whether core governance principles – discipline, transparency, independence, accountability, and fairness – translate into more timely, comparable, and understandable reports. A cross-sectional survey of senior executives and board members from 20 banks headquartered in Amman produced 214 valid responses (July–November 2022). Measurement validity and reliability were established, and structural equation modeling was used to test direct and indirect pathways. The results show that CG exerts a strong positive effect on financial reporting quality (β = 0.608) and that audit quality independently enhances reporting outcomes. Mediation analysis indicates that audit quality functions as a significant partial mediator of the CG-reporting link (indirect β = 0.247), demonstrating that governance improvements are amplified when supported by competent, independent, and professionally rigorous audits. These findings imply that governance architecture and assurance practices operate as complementary mechanisms: robust boards and effective audit committees create the conditions for high-quality audits, which in turn convert governance intent into decision-useful disclosures. The study provides context-specific evidence from Jordan’s banking sector, clarifying the channels through which governance reforms strengthen reporting credibility. Practically, the results endorse reinforcing audit committee independence, resourcing internal controls, and embedding transparent disclosure norms to sustain market confidence and align with international reporting expectations.