This study investigates both the individual and interaction effects of the Strength of Auditing and Reporting Standards (SARS) and governance on home bias across 53 countries participating in the Coordinated Portfolio Investment Survey (CPIS) from 2012 to 2019. Drawing on publicly available data, we employ a range of statistical methods to conduct a comprehensive assessment of the key determinants of home bias. The findings reveal a significant negative association between SARS and home bias, indicating that stronger auditing and reporting standards help reduce investors’ domestic preference. Governance exhibits heterogeneous effects depending on the legal system, with notable interaction patterns between SARS and governance in civil law and mixed legal system countries. The analysis also highlights the role of cultural distance and business confidence in shaping these relationships, underscoring the multifaceted nature of home bias. These results suggest that policymakers should enhance auditing and reporting standards and reinforce governance frameworks to lower perceived risks and attract foreign investment. By establishing a clear conceptual link between SARS and home bias, this study contributes novel insights to the literature.

This paper investigates the role of Islamic banks (IBs) in supporting sustainable development within the Gulf Cooperation Council (GCC) region by examining how institutional quality (IQ) moderates the relationship between social capital (SC) and environmental, social and governance (ESG) performance. Using a sample of 41 IBs from 2016 to 2022 and employing robust econometric techniques including EGLS, dynamic GMM and quantile regressions the study provides comprehensive evidence on the determinants of ESG outcomes. The empirical results reveal that institutional quality significantly enhances ESG performance, while social capital alone has no direct impact. However, the interaction between institutional quality and social capital is positive and significant, indicating that social capital contributes to ESG performance only in institutional environments characterized by sufficiently strong governance frameworks. This finding highlights the conditional and context-dependent role of social capital in shaping ESG outcomes within GCC Islamic banks. The study contributes to the literature by jointly analyzing formal (IQ) and informal (SC) mechanisms in shaping sustainability performance in Islamic banking an area that remains underexplored, particularly in the GCC context. It also offers practical implications: policymakers should focus on strengthening governance systems and aligning financial regulations with ESG objectives, while IBs should cultivate stakeholder trust and integrate ESG principles into their strategic priorities. Coordinated efforts can foster an enabling ecosystem for IBs to accelerate progress toward the United Nations Sustainable Development Goals (SDGs). Future research may expand the analysis by incorporating additional intangible factors, such as intellectual capital and exploring variations across regions and sectors.