Do political connections and Environmental, Social, and Governance (ESG) performance affect the relationship between climate change risk and audit efforts?

The influence of climate risk disclosures on audit engagements remains unclear, largely due to a scarcity of empirical evidence regarding their effect on audit efforts. This study addresses this gap by examining the impact of climate risk disclosures on auditors’ workload. Additionally, it investigates whether political connections and Environmental, Social, and Governance (ESG) performance moderate this relationship within emerging markets in Egypt. The analysis uses data from non-financial companies listed on the Egyptian Stock Exchange between 2017 and 2022. Multiple regression models were developed to test the research hypotheses. Results reveal that greater climate risk disclosure prompts auditors to exert increased effort. Furthermore, this effect is amplified in companies with political connections and higher ESG performance. Robustness tests, employing alternative measures of climate risk disclosure, confirm these findings.