EFFECT OF ECONOMIC, SOCIAL AND GOVERNANCE DISCLOSURES ON FIRM VALUE AND THE MODERATING EFFECT OF LEVERAGE. A STUDY OF LISTED NON-FINANCIAL FIRMS IN NIGERIA

Abstract

In recent years, ESG disclosure has been promoted as a mechanism for improving corporate transparency and enhancing firm value, yet empirical evidence from emerging economies remains inconclusive. This study explores the effect of economic, social and governance disclosures on firm value among listed non-financial firms in Nigeria. ESG disclosure scores are derived from firms' annual reports using content analysis, while firm value is measured by Tobin's Q. Recognizing that firm-specific conditions may influence market perceptions, the study introduces financial leverage as a moderating variable. Using panel data regression techniques, the findings show that economic and governance disclosures are positively associated with firm value, whereas social disclosure does not exhibit a significant effect. The interaction analysis further indicates that higher leverage weakens the valuation benefits of ESG disclosure. These results align with signalling and stakeholder theories and reflect the cautious response of investors to sustainability information in markets with elevated financial risk. The study contributes to the growing ESG literature by providing evidence from Nigeria and highlights the importance of financial structure in shaping the value relevance of sustainability reporting.

Keywords: ESG disclosure; firm value; financial leverage; sustainability reporting