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ABSTRACT This study examines the association between the strength of remuneration clawback policies and climate change disclosure performance (CCDP) among Australian nonfinancial firms over the period 2008–2022. Grounded in agency theory, signalling theory and governance complementarity, the findings show that stronger clawback provisions are significantly associated with higher levels of climate‐related disclosure. This suggests that clawback policies operate as an ex post governance mechanism that enhances disclosure credibility by reducing managerial opportunism and strengthening accountability in voluntary reporting settings. The effect is further strengthened in firms with more effective board oversight, greater gender diversity and ESG‐linked executive compensation. The results remain robust across propensity score matching, two‐stage least squares and system GMM estimations. The study's originality lies in integrating clawback governance mechanisms into the climate disclosure literature, particularly in the Australian context where evidence remains limited. Methodologically, it contributes by developing a multidimensional measure of clawback strength and combining it with a comprehensive climate disclosure index. Overall, the study highlights clawback provisions as an important but underexplored determinant of climate disclosure quality, offering implications for regulators and boards seeking to strengthen corporate accountability in sustainability reporting.
Eulaiwi et al. (Tue,) studied this question.