Studying The Interactive Impact of Accounting Disclosure of Climate Change Risks and the Quality of Corporate Governance Mechanisms on Investors’ Decisions: An Empirical Study on Companies Listed on the Egyptian Stock Exchange

Research Purpose: Study and analyze the interactive impact of accounting disclosure of climate change risks and the quality of corporate governance mechanisms on investors’ decisions, by applying it to companies listed on the Egyptian Stock Exchange.
Design and Methodology: The study relied on the content analysis method to examine the content of annual reports for a sample of (50) companies listed on the Egyptian Stock Exchange during the period in which the Financial Regulatory Authority’s Resolution No. 107 and 108 of 2021 regarding disclosure of climate changes according to ESG standards and TCFD disclosures were implemented, which is From the year (2022) until (2023) with a total of (100) views, in order to test the research hypotheses, which reflect the interactive effect between accounting disclosure of climate change risks and the quality of corporate governance mechanisms on investors’ decisions, using a set of statistical methods.
To achieve the study objective, three models were built: the first to measure the impact of climate change risk disclosure on investor decisions, the second to measure the impact of the quality of corporate governance mechanisms on investor decisions, and the third to measure the impact of the interaction between climate change risk disclosure and the quality of governance mechanisms on investor decisions.
Results and Recommendations: The results of this study indicate that climate change risk disclosure positively affects investors' decisions, and that the quality of corporate governance mechanisms also positively affects investors' decisions, in addition to the interaction between climate change risk disclosure and the quality of corporate governance mechanisms positively affects investors' decisions. Based on these results, it is recommended that Egyptian accounting standards adopt the international standard IFRS S2 on climate change to establish the requirements and mechanisms for disclosing climate change risks, which enhances regulatory compliance and contributes to keeping pace with the transition to a low-carbon economy, while encouraging auditors in the Egyptian environment to provide assurance. We provide professional attention to this information in order to give it confidence and credibility and increase the possibility of relying on it by users of annual reports, especially investors.
Originality and Addition: This study provides an addition to the accounting literature in this field by demonstrating the interactive effect of climate change risk disclosure and the quality of governance mechanisms on investors’ decisions and providing practical evidence from companies listed on the Egyptian Stock Exchange.