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This paper aims to examine whether the audit committee moderates the relationship between audit quality and market reactions.

Using fixed effects and the GMM model for robustness, the study used 472 publicly listed firms on South Africa’s Johannesburg stock exchange spanning a period of six years from 2014 to 2019.

Results obtained show that audit quality impacts market reactions through share price and adjusted market returns. And, that the audit committee moderates the relationship between audit quality and market reactions in South Africa’s publicly listed firms. An effective audit committee is expected to play a crucial role in overseeing the audit process, ensuring the independence of auditors and promoting transparency and accountability which in turn impacts asset prices.

The study implies that governments and regulatory bodies in other developing economies could strengthen regulations about companies’ Acts, how firms regulate themselves and more so audit committees. Firms can also strive to make sure that audit committees are staffed with experts to promote higher audit quality and investor attention to get access to the much-alluded capital.

To the best of the authors’ knowledge, the study adds value by being the first to explore the subject matter of the importance of audit committees in defining audit quality and market reactions in publicly listed firms. The research adds to the body of knowledge on corporate governance and audit quality. It provides a case study specific to the South African context, contributing to the global literature on these topics.

The purpose of this study is to investigate the mediating impact of integrated reporting on the relationship between audit quality and market reactions in Africa using South Africa as a sample.

The study sample size consists of 119 firms listed on the Johannesburg Stock Exchange. The study was carried out for the period 2011–2019. Market reactions were proxy by share price and adjusted market returns. The authors controlled for the effects of market reactions by using other firm specifics like operating income, assets, leverage and return on assets and thereafter carried out robustness checks included under additional analysis.

Results from the study showed that integrated reporting partially mediates the relationship between audit quality and market reactions. Moreover, audit quality has a positive significant impact on market reactions in the form of the share price. The results were obtained in addition to a robustness check using adjusted market returns as a proxy for market reactions.

Regulators and standard setters in other countries should make integrated reporting mandatory. This study not only informs the public and investors about the organization’s business performance but also reveals auditor assurances that enchase market confidence in the company.

Exploring the mediating impact of integrated reporting on the relationship between audit quality and market reactions yields valuable insights. Integrated reporting, which combines financial and non-financial information, influences how investors perceive and react to audit quality. Understanding this interplay could shed light on the broader implications for corporate transparency and accountability.

The authors are the first to conduct such a study in an emerging economy. Hence, the authors used integrated reporting as a new variable in the study of audit quality and market reactions. Furthermore, the authors used adjusted market returns under robustness checks to check if audit quality has an impact on market reactions.