Effect of Environmental, Social and Governance (ESG) Disclosure on Market Value of Listed Non-Financial Firms in Nigeria

Abstract

This study examines the effect of ESG disclosure on the market value of listed non-financial firms in Nigeria between 2014 and 2025, with Market Value (MV) serving as the measure of firm value. The specific objective was to assess how Environmental Disclosure Index (EDI), Social Disclosure Index (SDI), Governance Disclosure Index (GDI), Sustainability Reporting Score (SRS), and ESG Assurance Presence (ESG_AP) influence MV. Using panel data from listed non-financial firms and applying panel least squares regression analysis, the study found that only one of the examined ESG variables had a statistically significant effect on market value. Environmental Disclosure Index (β = 216,919.4, p = 0.0000) exhibited a statistically significant positive relationship with market value, indicating its strong influence on firm valuation. In contrast, Social Disclosure Index (β = -37,115.03, p = 0.5001), Governance Disclosure Index (β = -37,640.56, p = 0.2348), Sustainability Reporting Score (β = -131,027.8, p = 0.0981), and ESG Assurance Presence (β = 91.0513, p = 0.8232) all showed negative or statistically insignificant effects on market value. Descriptive statistics revealed moderate variation in ESG disclosure levels across firms, while market value exhibited high dispersion, indicating significant differences in firm size and valuation within the sample. The findings imply that investor valuation in the Nigerian non-financial sector is more responsive to environmental disclosure than to social, governance, and assurance-related ESG information. The study concludes that while ESG disclosures are important for corporate transparency and sustainability reporting, their influence on market value is uneven, with environmental information being the most impactful. It recommends that firms strengthen their environmental disclosure practices and that regulators enhance ESG reporting frameworks to improve the relevance, consistency, and investor usefulness of ESG information in Nigeria’s capital market.