Audit Committee Effectiveness, Institutional Ownership, and Climate Change Disclosure: Evidence From European Firms

ABSTRACT This study examines the relationship between audit committee (AC) effectiveness and climate change disclosure (CCD) and investigates the moderating role of institutional ownership in this relationship. The study used a sample of 3896 firm‐year observations from 14 European countries over the period 2017–2024. We measure AC effectiveness through its individual characteristics: size, independence, financial expertise, gender diversity, and meeting frequency. CCD attributes are assessed using firms' responses to Carbon Disclosure Project (CDP) questionnaires. The results show that effective ACs significantly enhance the level, quality, and transparency of CCD. Furthermore, institutional ownership strengthens these associations, highlighting the complementary roles of internal and external governance forces in promoting sustainability accountability. Robustness analyses reveal that AC attributes have a stronger impact on CCD in environmentally sensitive industries, and this effect is further enhanced by the presence of long‐term institutional investors.