Value Auditing and Public Trust in the Financial System: The Role of Transparency and Accountability in an Arab-International Comparative Analysis
DOI:
https://doi.org/10.31272/jae.i152.1525Keywords:
Value-based auditing,, transparency,, accountability,, public trust,, institutional legitimacy,, ethical governance,, Arab financial system,, international comparison,Abstract
This research aims to analyse the role of value auditing in enhancing public trust in the financial system by constructing an integrated causal model that links transparency and accountability as intermediary mechanisms for generating institutional legitimacy. The research stems from a knowledge gap characterised by the dominance of traditional approaches that treat auditing, transparency, and accountability as separate concepts within a procedural compliance framework, neglecting the value dimension that explains how public trust is generated in a structurally integrated manner. The research is based on the central hypothesis that public trust is not a direct result of regulatory compliance, but rather the outcome of a value-based interaction between institutional knowledge and ethical responsibility. To achieve this, the study employs an analytical-integrated approach that combines a philosophical framework with structural equation modelling (SEM) to examine the direct and indirect causal relationships between four key variables: value auditing, transparency, accountability, and public trust. A comparative sample representing Arab and international financial systems is used for this purpose. The results showed that value auditing positively impacts public trust through two indirect pathways: transparency and accountability. Accountability emerged as the most influential variable in generating institutional legitimacy. The findings also revealed structural differences between the two contexts. International systems exhibit a higher degree of value integration within their governance mechanisms, while a compliance-oriented perspective continues to dominate many Arab systems. The originality of this research lies in developing an explanatory model that integrates the value dimension with quantitative analysis to measure the indirect impact of auditing on public trust. This contributes to redefining auditing as a mechanism for producing institutional legitimacy. The study recommends integrating public values into auditing standards, enhancing interactive transparency, and developing accountability models that reflect the ethical responsibility of the financial system towards society.
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