ESG practices and firm value: Evidence from listed financial firms in Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i2.358.228-243Keywords:
ESG, Environmental disclosures, Social Disclosure, Governance disclosure, Firm ValueAbstract
Purpose: This study examined the effect of Environmental, Social, and Governance (ESG) practices on the value of listed financial firms in Nigeria. Specifically, the study investigated the effect of Environmental Practice Disclosure Index (EPDI), Social Practice Disclosure Index (SPDI), and Governance Practice Disclosure Index (GPDI) on firm value.
Methodology: The study adopted an ex-post facto research design. The population comprised deposit money banks in Nigeria, while the sample consisted of all seven internationally licensed deposit money banks listed on the Nigerian Exchange Group (NGX). A census sampling technique was employed, covering the period from 2015 to 2024. Data were obtained through content analysis of ESG disclosure items extracted from the annual reports of the selected banks. Multiple linear regression analysis was used to examine the relationship between ESG disclosure practices and firm value.
Results and Conclusion: The findings revealed that ESG disclosures have a significant effect on the value of listed financial firms in Nigeria. Among the ESG dimensions, Governance Practice Disclosure Index (GPDI) exerted the strongest influence on firm value, while Environmental Practice Disclosure Index (EPDI) and Social Practice Disclosure Index (SPDI) demonstrated relatively minimal effects. The study concluded that governance-related disclosures are the most influential ESG component in enhancing the value of listed financial firms in Nigeria.
Implication of Findings: The findings imply that ESG disclosure practices serve as important signals of transparency, accountability, and quality in the Nigerian banking sector. Enhanced governance disclosures, in particular, can strengthen investor confidence and distinguish high-performing banks from institutions with potential hidden risks. Consequently, financial firms should prioritize comprehensive ESG reporting, especially governance-related disclosures, to improve market valuation and stakeholder trust.
References
Abdulrasheed, J. A., Rasaq, B. A., & Sikiru, S. A. (2025). Social disclosure practices and financial performance: Evidence from non-financial firms in Nigeria. FUDMA Journal of Accounting and Finance Research (FUJAFR), 3(4), 58-73. DOI: https://doi.org/10.33003/fujafr-2025.v3i4.240.58-73
Aboud, A., & Diab, A. A. Z. (2018). The impact of social, environmental and corporate governance disclosures on firm value: Evidence from Egypt. Journal of Accounting in Emerging Economies, 8(4), 442–458. DOI: https://doi.org/10.1108/JAEE-08-2017-0079
Adamu, S. A., Adeola, A. J., & Buba, I. B. (2024). The impact of sustainability reporting on financial performance: A case study of Zenith Bank Nigeria (2013–2023). Sahel International Multidisciplinary Journal (SIMJ), 8(2), 143–160.
Adegbie, E., Guney, Y., Kwabi, F., & Tahir, S. (2019). Financial and corporate social performance in the UK listed firms: The relevance of non-linearity and lag effects. Review of Quantitative Finance and Accounting, 52(1), 105–158. DOI: https://doi.org/10.1007/s11156-018-0705-x
Adekunle, A. O. (2025). Environmental and sustainability disclosure as signals for firm value: A comparative empirical analysis across institutional and cultural contexts. Journal of Economic and Social Development (JESD)–Resilient Society, 12(2). https://www.jesd-online.com/articles/environmental-and-sustainability-disclosures-as-signals-of-firm-value-a-comparative-empirical-analysis-across-institutio.pdf
Arevalo, J., Martin, R., & Torres, M. (2025). Valuing ESG: How financial markets respond to corporate sustainability. International Business Review, 34(3), Article 102418. DOI: https://doi.org/10.1016/j.ibusrev.2025.102418
Arniati, T., Muslichah, M., & Nurastuti, N. (2025). Environmental disclosure and firm value: The moderating role of board size. International Journal of Accounting, Management, Economics and Social Sciences (IJAMESC), 3(2), 605–614. DOI: https://doi.org/10.61990/ijamesc.v3i2.474
Bagh, T., Hunjra, A. I., & Corbet, S. (2025). The impact of corporate governance on firm value: Understanding the role of strategic change. International Review of Economics & Finance, 103, 104472. DOI: https://doi.org/10.1016/j.iref.2025.104472
Bamahros, H. M., Shukeri, S. N., Al-Duais, S. D., & Wan-Hussin, W. N. (2022). ESG disclosure and firm value: Evidence from developing economies. Journal of Accounting in Emerging Economies, 12(4), 641–660.
Behl, A., Kumari, P. S. R., Makhija, H., & Sharma, D. (2022). Exploring the relationship of ESG score and firm value using cross-lagged panel analyses: Case of the Indian energy sector. Annals of Operations Research, 313(1), 231–256. DOI: https://doi.org/10.1007/s10479-021-04189-8
Bhaskaran, R. K., Ting, I. W. K., Sukumaran, S. K., & Sumod, S. D. (2020). Environmental, social and governance initiatives and wealth creation for firms: An empirical examination. Managerial and Decision Economics, 41(5), 710–729. DOI: https://doi.org/10.1002/mde.3131
Bhatia, S., & Marwaha, D. (2022). The influence of board factors and gender diversity on the ESG disclosure score: A study on Indian companies. Global Business Review, 23(6), 1544–1557. DOI: https://doi.org/10.1177/09721509221132067
Bilewu, O. A., Somoye, R. O. C., & Akintoye, I. R. (2023). Internal social labour disclosures and shareholders value in Nigerian listed manufacturing companies. International Journal of Financial Research and Business Development, 2(1), 41-58.
Birindelli, G., Dell’Atti, S., Iannuzzi, A. P., & Savioli, M. (2018). Composition and activity of the board of directors: Impact on ESG performance in the banking system. Sustainability, 10(12), 4699. DOI: https://doi.org/10.3390/su10124699
Broadstock, D. C., Matousek, R., Meyer, M., & Tzeremes, N. G. (2020). Does corporate social responsibility impact firms’ innovation capacity? The indirect link between environmental & social governance implementation and innovation performance. Journal of Business Research, 119, 99–110. DOI: https://doi.org/10.1016/j.jbusres.2019.07.014
Buallay, A. (2020). Sustainability reporting and firm performance: Evidence from Gulf countries. Journal of Business and Socio-economic Development, 1(2), 1–12.
Busari, R. R., & Adegbayibi, A. T. (2025). ESG reporting and market performance: Empirical evidence from listed oil and gas firms in Nigeria. Saudi Journal of Business and Management Studies, 10(8), 391–398. DOI: https://doi.org/10.36348/sjbms.2025.v10i08.004
Central Bank of Nigeria. (2012). Implementation of sustainable banking principles by banks, discount houses and development finance institutions in Nigeria. https://www.cbn.gov.ng/out/2012/ccd/circular-nsbp.pdf
Ching, H. Y., & Gerab, F. (2017). Sustainability reports in Brazil through the lens of signaling, legitimacy and stakeholder theories. Social Responsibility Journal, 13(1), 95–110. DOI: https://doi.org/10.1108/SRJ-10-2015-0147
Constantinescu, D., Caraiani, C., Lungu, C. I., & Mititean, P. (2021). Environmental, social and governance disclosure associated with the firm value: Evidence from energy industry. Accounting and Management Information Systems, 20(1), 56–75.
Desai, R., & Raval, A. (2022). Examining the relation between market value and CO₂ emission: Study of Indian firms. Copernican Journal of Finance & Accounting, 11(3), 9–25. DOI: https://doi.org/10.12775/CJFA.2022.011
De Villiers, C., La Torre, M., & Molinari, M. (2022). The Global Reporting Initiative’s (GRI) past, present and future: Critical reflections and a research agenda on sustainability reporting (standard-setting). Pacific Accounting Review, 34(5), 728–747. DOI: https://doi.org/10.1108/PAR-02-2022-0034
Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91. DOI: https://doi.org/10.2307/258887
Dorothy, P., & Endri, E. (2024). Environmental, social and governance disclosure and firm value in the energy sector: The moderating role of profitability. Problems and Perspectives in Management, 22(4), 588–599. DOI: https://doi.org/10.21511/ppm.22(4).2024.44
Ebele, A. A., & Onuora, J. K. J. (2024). Environmental disclosures and firm value: An empirical evidence on Nigerian firms. Journal of Accounting and Financial Management, 10(2), 79–101.
Emeka-Nwokeji, N. A., & Osisioma, B. C. (2019). Sustainability disclosures and market value of firms in emerging economy: Evidence from Nigeria. European Journal of Accounting, Auditing and Finance Research, 7(3), 1–19.
Freeman, R. E., Wicks, A. C., & Parmar, B. (2004). Stakeholder theory and the corporate objective revisited. Organization Science, 15(2), 364–369. DOI: https://doi.org/10.1287/orsc.1040.0066
Gwar, S., Angahar, P. A., Upaa, J. U., & Tyungu, J. I. (2025). Interaction effect of board attributes on the relationship between environmental disclosure and market value: Evidence from listed manufacturing firms in Nigeria. FUDMA Journal of Accounting and Finance Research (FUJAFR), 3(1), 31–39. DOI: https://doi.org/10.33003/fujafr-2025.v3i1.153.31-39
Hafidz, S., & Deviyanti, D. (2022). Pengaruh kinerja lingkungan terhadap nilai perusahaan dengan pengungkapan CSR sebagai variabel intervening. Jurnal Akuntansi, 19(2), 366–374. DOI: https://doi.org/10.30872/jakt.v19i2.11123
Handayati, P., Sumarsono, H., & Narmaditya, B. S. (2022). Corporate social responsibility disclosure and Indonesian firm value: The moderating effect of profitability and firm’s size. Journal of Eastern European and Central Asian Research, 9(4), 703–714. DOI: https://doi.org/10.15549/jeecar.v9i4.940
Idamoyibo, H. R. (2025). CSR compensation cost and firm value in Nigeria: Mediating effect of liquidity, moderating effect of firm size, firm growth and business risk. FUDMA Journal of Accounting and Finance Research [FUJAFR], 3(2), 70–86. DOI: https://doi.org/10.33003/fujafr-2025.v3i2.171.70-86
Inanga, O. P., Emenyi, E. O., Akpan, D. C., & Udom, N. A. (2025). Environmental disclosures practice and growth of listed industrial goods firms in Nigeria. GPH-International Journal of Business Management, 8(9), 134–179.
Iredele, O. O., & Ajijola, A. (2021). Environmental, social and governance disclosures and value of firms listed on the Premium Board of Nigeria Exchange. Gusau International Journal of Management and Social Sciences, 8(2), 1-24. DOI: https://doi.org/10.57233/gijmss.v8i2.01
Isa, A., Naburgi, M. M., & Abubakar, H. S. (2026). Effect of corporate social responsibility disclosure on firm value among listed industrial goods companies in Nigeria. Journal of Accounting and Financial Management, 12(3), 231–243.
Ismail, N., Anridho, N., Isa, M. A. M., Rahman, N. H. A., & Ismail, N. (2022). Corporate sustainability and firms' financial performance: Evidence from Malaysian and Indonesian public listed companies. International Journal of Economics and Management, 16(2), 213–224. DOI: https://doi.org/10.47836/ijeam_16.2.05
Izuagie, A. M. (2025). Impact of ESG practices and financial performance of some selected quoted manufacturing firms in Nigeria. International Journal of Foreign Trade and International Business, 7(1), 176–189. DOI: https://doi.org/10.33545/26633140.2025.v7.i1b.158
Jamal, D. K., Arifuddin, A., & Madein, A. (2025). The influence of social and environmental disclosure on firm value moderated by external assurance. In Proceedings of the 9th International Conference on Accounting, Management, and Economics (ICAME 2024) (pp. 1757–1773). Atlantis Press. DOI: https://doi.org/10.2991/978-94-6463-758-8_139
Keter, C. K. S., Cheboi, J. Y., & Kosgei, D. (2024). Financial performance, intellectual capital disclosure and firm value: The winning edge. Cogent Business & Management, 11(1), 2302468. DOI: https://doi.org/10.1080/23311975.2024.2302468
Kuwa, S. A., & Modibbo, A. (2023). Environmental, social, and governance (ESG) practices and financial performance of listed deposit money banks in Nigeria. International Journal of African Research and Sustainability Studies, 9(2), 123–150.
Laksmana, C. V., & Hartono, W. (2025). The effect of sustainability disclosure on firm value moderated by good corporate governance. Journal of Management Studies and Development, 4(3), 275–294. DOI: https://doi.org/10.56741/jmsd.v4i03.1264
Melinda, A., & Wardhani, R. (2020). The effect of environmental, social, governance, and controversies on firms’ value: Evidence from Asia. In Advanced issues in the economics of emerging markets (pp. 147–173). Emerald Publishing Limited. DOI: https://doi.org/10.1108/S1571-038620200000027011
Moktar, N., Deli, M. M., Rauf, U. A. A., Idris, F., & Purwati, A. A. (2023). ESG disclosure: The extent of investors’ confidence in stock market. International Journal of Academic Research in Progressive Education and Development, 12(3), 1009–1027. DOI: https://doi.org/10.6007/IJARPED/v12-i3/18989
Munir, A. R., & Pratama, A. (2025). Emission performance, environmental disclosure, and firm value: Evidence from Southeast Asia. Risks, 13(12), 235. DOI: https://doi.org/10.3390/risks13120235
Naeem, M., Ullah, H., Shahid, J., & Kakakhel, S. J. (2022). The impact of ESG practices on firm performance: Evidence from emerging countries. Indian Journal of Economics and Business, 20(1), 731–750.
Nguyen, V. H. (2025). Corporate social responsibility disclosure and firm value: A signaling theory perspective. Journal of Economics and Development, 27(2), 114–128. DOI: https://doi.org/10.1108/JED-02-2024-0067
Nguyen, T. L. A., & La, T. T. T. (2025). ESG and firm value in Vietnam: The moderating role of profitability. International Journal of Analysis and Applications, 23, Article 234. DOI: https://doi.org/10.28924/2291-8639-23-2025-234
Oktadewi, A. M. A., & Diantini, A. N. (2025). ESG and firm value: The moderating role of environmental performance and profitability in Indonesia’s mining sector. International Research Journal of Management, IT & Social Sciences, 12(4), 217–229. DOI: https://doi.org/10.21744/irjmis.v12n4.2536
Olayinka, M. U., & Temitope, A. S. (2021). Environmental, social and governance (ESG) practices and financial performance of listed financial institutions in Nigeria. Journal of Sustainable Finance & Investment, 11(4), 320–338.
Omotoso, A., Yusuf, M. A., & Idris, A. A. (2024). Effect of governance and social sustainability reporting on the financial performance of listed manufacturing firms in Nigeria. FUDMA Journal of Accounting and Finance Research [FUJAFR], 2(2), 133–142. DOI: https://doi.org/10.33003/fujafr-2024.v2i2.99.133-142
Orisakwe-Lawrence, C. (2023). Effect of voluntary environmental disclosure on firm value of quoted financial services companies in Nigeria. UMM Journal of Accounting and Financial Management, 3(1), 54–72.
Oworu, O. O., Oshadare, O. A., & Olanrewaju, A. G. (2025). Effect of sustainability disclosures on firms' value of listed non-financial companies in Nigeria. Imo State University Business & Finance Journal, 16(3), 1–21.
Oyedokun, G. E., Egberioyinemi, E., & Tonade, A. A. (2019). Environmental accounting disclosure and firm value of listed industrial goods companies in Nigeria. Journal of Accounting and Strategic Finance, 2(2), 127–142. DOI: https://doi.org/10.33005/jasf.v2i2.48
Porter, M. E., & Kramer, M. R. (2018). Creating shared value: How to reinvent capitalism—and unleash a wave of innovation and growth. In Managing sustainable business (pp. 323–346). Springer, Dordrecht. DOI: https://doi.org/10.1007/978-94-024-1144-7_16
PwC Nigeria. (2024). PwC Nigeria transparency report for 2024. https://www.pwc.com/ng/en/publications/pwc-nigeria-transparency-report.html
Sari, D. P., Fikri, M., Kartika, R., & Tanwattana, N. (2025). Corporate governance, ESG disclosure, and firm value: Evidence from public companies in Indonesia. Journal of Economics and Management, 3(2), 50–59. DOI: https://doi.org/10.70716/ecoma.v3i2.235
Sari, D. D. I., & Valdiansyah, R. H. (2025). Effectiveness of ESG practices in enhancing firm value: Evidence from Indonesian banking. Journal of Contemporary Accounting, 7(3), 226–238. DOI: https://doi.org/10.20885/jca.vol7.iss3.art6
Sayuti, A., Mohammed, N. F., & Amirrudin, M. S. (2025). Environmental disclosure, financial performance, and firm value in the mining and manufacturing industry. Management & Accounting Review, 24(2), 181–208. DOI: https://doi.org/10.24191/MAR.V24i02-08
Setiadharma, S., & Machali, M. (2017). The effect of asset structure and firm size on firm value with capital structure as intervening variable. Journal of Business & Financial Affairs, 6(4), 1–5. DOI: https://doi.org/10.4172/2167-0234.1000298
Sharma, R. B., Lodha, S., Sharma, A., Ali, S., & Elmezughi, A. M. (2022). Environment, social and governance reporting and firm performance: Evidence from GCC countries. International Journal of Innovative Research and Scientific Studies, 5(4), 419–427. DOI: https://doi.org/10.53894/ijirss.v5i4.1006
Sharma, P. N., Sulastri, W. M., & Isnurhadi. (2024). Corporate sustainability and financial performance: Evidence from state-owned enterprises in Indonesia. KnE Social Sciences, 111–125. DOI: https://doi.org/10.18502/kss.v9i14.16119
Shawai, A. S., Lok, C. L., & Jalaludin, D. (2025). Corporate environmental disclosure and market value: Do board independence matter? FUDMA Journal of Accounting and Finance Research [FUJAFR], 3(4), 311–325. DOI: https://doi.org/10.33003/fujafr-2025.v3i4.249.311-325
Singh, A., Singh, P., & Shome, S. (2022). ESG–CFP linkages: A review of its antecedents and scope for future research. Indian Journal of Corporate Governance, 15(1), 48–69. DOI: https://doi.org/10.1177/09746862221089062
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374. DOI: https://doi.org/10.2307/1882010
Veeravel, V., Murugesan, V. P., & Narayanamurthy, V. (2024). Does ESG disclosure really influence the firm performance? Evidence from India. The Quarterly Review of Economics and Finance, 95, 193–202. DOI: https://doi.org/10.1016/j.qref.2024.03.008
Yahaya, O. A. (2025). The role of institutional investors in the nexus between sustainability disclosure and firm performance. Journal of Finance & Applied Economics, 15(9), 31–66. DOI: https://doi.org/10.2139/ssrn.5171577
Yunarsih, N. K., Wirama, D. G., Putra, I. N. W. A., & Sisdyani, E. A. (2023). The effect of environmental performance, managerial ownership, and dividend policy on the relative value of a company. International Research Journal of Management, IT and Social Sciences, 10(3), 141–153. DOI: https://doi.org/10.21744/irjmis.v10n3.2312
Yoon, B., Lee, J. H., & Byun, R. (2018). Does ESG performance enhance firm value? Evidence from Korea. Sustainability, 10(10), 3635. DOI: https://doi.org/10.3390/su10103635
Zheng, Y., Shiyang, P., Sun, X., & Jiajin, G. (2025). Research on the impact of ESG performance on firm value. Polish Journal of Environmental Studies, 34(2), 1–18.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Joy Edeheudim Essien, Sunday A Effiong, Emerald Ajija Ogar
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The FUDMA Journal of Accounting and Finance Research (FUJAFR) operates a copyright policy that ensures a balance between author rights and wide dissemination of scholarly work.
1. Author Copyright Retention
Authors retain full copyright of their published work without restriction. Submission to FUJAFR does not transfer ownership of copyright to the journal.
2. License to Publish
By submitting a manuscript and upon acceptance, authors grant FUJAFR:
- The right to publish, reproduce, and distribute the article
- The right to identify itself as the original publisher of the work
This grant is non-exclusive, meaning authors are free to reuse their work in other contexts, provided proper acknowledgment of the original publication in FUJAFR is made.
3. Licensing of Published Content
All articles are published under the:
Creative Commons Attribution-NonCommercial License (CC BY-NC 4.0)
Under this license:
- Users may share and adapt the work for non-commercial purposes only
- Proper attribution to the author(s) and the journal is required
- Any commercial use requires explicit permission from the copyright holder
4. Author Reuse Rights
Authors are permitted to:
- Archive their published articles in institutional repositories or personal websites
- Share their work for educational and research purposes
- Reuse portions of their work in future publications (e.g., books or other articles), provided proper citation of the original publication is included
5. Third-Party Content
Authors are responsible for obtaining permission to use any third-party copyrighted material (e.g., images, tables, datasets) included in their manuscripts. Proper acknowledgment must be provided where required.
6. Attribution Requirement
All users of FUJAFR content must provide appropriate credit, including:
- Author name(s)
- Article title
- Journal name (FUJAFR)
- Year of publication
