EFFECT OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE DISCLOSURE ON MARKET VALUE OF MANUFACTURING FIRMS IN NIGERIA
Imong, Nelly Raphael ,Abdulkarim Shaibu Alhassan and Doshiro Musa Umar, PhD
Volume 12 Issue 2
Abstract
This study investigates the impact of Environmental, Social, and Governance (ESG) reporting on the market value of manufacturing firms listed on the Nigerian Exchange Group (NGX) as of 2023. Adopting an ex-post facto research design, the study utilizes secondary data sourced from publicly available financial and sustainability reports of these firms. The analysis examines the relationship between each of the three ESG dimensions environmental, social, and governance reporting and the market value of these firms. The findings reveal that environmental reporting has a positive and significant effect on market value, with an increase in environmental disclosures leading to higher market value. Conversely, social reporting was found to have a negative and significant effect on market value, indicating that increased social reporting correlates with a decrease in market value. However, governance reporting has a notably positive and significant effect on market value, with higher governance disclosures associated with an increase in market value. These results show the critical role of governance reporting in enhancing firm valuation, while also highlighting the nuanced effects of environmental and social disclosures in the Nigerian. The study concludes that manufacturing firms in Nigeria should prioritize governance-related disclosures and strategically manage their environmental and social reporting to align with investor expectations. Recommendations include strengthening governance reporting, aligning social initiatives with business strategy, and enhancing the quality and transparency of environmental disclosures to improve investor confidence and market performance. Keywords: Environmental Reporting, Social Reporting, Governance Reporting, Market Value, Tobins Q, Manufacturing Firms.
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