The　study　explores　the　moderating　role　of　audit　quality　in　the　relationship　between　environmental,　social,　and　governance　(ESG)　factors　and　corporate　financial　performance　(CFP)　in　Western　European　countries.　The　research　sample　includes　620　firms　headquartered　in　Western　Europe,　including　Austria,　Belgium,　France,　Germany,　Luxembourg,　Monaco,　the　Netherlands,　and　Switzerland　from　2010　to　2019.　Panel　data　estimations　are　used　to　examine　the　direct　and　moderating　effects.　The　results　show　that　ESG　has　a　significantly　negative　effect　on　a　firm＇s　financial　performance　as　measured　by　the　return　on　assets　(ROA),　supporting　the　trade-off　hypothesis　in　which　investing　in　ESG　activities　increases　the　cost　of　business.　Additionally,　we　find　that　ESG＇s　adverse　influence　on　CFP　is　more　evident　at　enterprises　that　are　certified　by　Big　Four　accounting　firms.　However,　ESG　has　a　significantly　positive　effect　on　revenue,　suggesting　that　customers　are　more　attracted　to　firms　that　invest　in　ESG.　The　analysis　of　the　subcomponents　of　ESG　supports　the　main　results.　The　results　are　robust　to　alternative　model　specifications　and　alternative　measures　of　CFP　and　audit　quality　and　are　free　of　endogeneity　issues.　The　findings　contribute　to　the　existing　knowledge　on　ESG　by　elucidating　the　effect　of　external　auditor　quality　on　the　ESG-CFP　relationship.　We　also　examine　overall　ESG　scores　as　well　as　individual　ESG　characteristics　(environmental,　social,　and　governance).　©　2022　Borsa　Ä°stanbul　Anonim　Åžirketi