Investors’ Reaction to Sustainability Disclosures Under Varying Assurance Levels and Assurer Types: An Experimental Approach

This study examines how assurance level and assurer type jointly influence non-professional investors’ reactions to sustainability disclosures in an emerging market context. It employs a controlled 2 × 2 mixed-design experiment that manipulates assurance level (limited vs. reasonable) and assurer type (audit firm vs. non-audit firm). Data were collected from MBA and DBA students in Egypt as proxies for non-professional investors. Investor reaction is captured through multiple measures, including perceived sustainability performance, reliance on sustainability information, investment intention, stock valuation, and decision confidence. Non-parametric statistical techniques are used to test hypotheses, complemented by exploratory machine learning using SHAP values. The results provide strong and consistent evidence that the assurance level is the dominant factor shaping investor reactions. Reasonable assurance significantly enhances investor judgments across all key measures, whereas the type of assurer does not have a statistically significant independent effect. Additional analyses reveal that reasonable assurance from a non-audit firm elicits more favorable reactions than limited assurance from an audit firm, underscoring the primacy of assurance strength over provider identity. Exploratory findings further indicate that assurance influences investment decisions primarily through perceived sustainability performance and reliance on information. This study contributes to the literature by clarifying the relative roles of assurance level and assurer type and providing novel evidence from an emerging market setting (i.e., Egypt). The findings offer important implications for firms, assurance providers, and regulators seeking to enhance the credibility and decision usefulness of sustainability reporting.