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This research paper aims to empirically explore how stock market investors’ perceptions are affected by extreme climatic events like El Nino and floods in Malaysia.

This study uses structural equation modelling (SEM) to analyse the empirical data gathered through a questionnaire survey involving 273 individual investors from Bursa Malaysia between January and June 2019.

Results reveal that companies’ efforts, especially for agriculture and plantation-based industries, to adapt to climate change risk at the production, business and stock market levels significantly impact investors’ behaviour and investment decisions. Moreover, stock market investors’ climate change knowledge shows a significant moderating effect on corporate climate change adaptation initiatives and investors’ decisions to invest in Malaysian agricultural and plantation industry stocks.

This research has significant implications for practice and policy, as it measures the stock market investors’ level of awareness about climate change events and explores the companies’ strategies to reduce climatic risks to their business model.

This study shows the way to adjust the climate change information in the stock market investment decision to improve market efficiency and sustainable stock exchanges initiative.

To the best of the authors’ knowledge, this paper is the pioneer one to provide a comprehensive link between climate change events and business performances at production level, business level and stock market levels by drawing inferences from empirical data on investors’ behaviours. This study also added value in investment theories and financial literature by observing the climate change as an important factor to determine the investors’ decisions in the stock market.