The Effect of Risk Management Assurance by The External Auditor on Investment Efficiency: A Survey Study

نوع المستند : المقالة الأصلية

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Abstract
Purpose – This paper aims to investigate the effect of risk management assurance by the external auditor on investment efficiency, highlighting its role in mitigating investment distortions.
Design/methodology/approach – The researcher conducts a survey study using 389 closed-ended questionnaires directed to stakeholders and auditors of Egyptian listed firms to examine their perceptions regarding the impact of risk management assurance on investment decisions.
Findings – The results of the survey study demonstrate a significant positive effect of risk management assurance on investment efficiency. Specifically, risk management assurance significantly reduces both overinvestment and underinvestment, leading to more optimal investment decisions. These findings suggest that independent assurance on risk management practices enhances investor confidence and corporate decision-making.
Originality – To the best of the researcher’s knowledge, this study is the first to investigate the effect of risk management assurance on investment efficiency. By doing so, it contributes to the voluntary nonfinancial assurance literature and narrows the existing research gap regarding risk management assurance, offering valuable insights for policymakers, regulators, and market participants.
Keywords Risk Disclosure; Risk Management Assurance; Investment Efficiency; External Audit; Overinvestment; Underinvestment.

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