Environmental, Social and Governance Disclosures and Financial Performance of Listed Insurance Firms in Nigeria: Evidence from Accounting and Market Measures

Abstract

This study examined the relationship between environmental, social and governance (ESG) disclosures and the financial performance of listed insurance firms in Nigeria. Specifically, the study assessed the effects of environmental, social and governance disclosures on accounting and market measures of financial performance, represented by return on assets (ROA) and market value per share (MVS), respectively. The study adopted an ex post facto research design and used secondary data obtained from the annual reports of 23 insurance firms listed on the Nigerian Exchange Group over the period 2012–2023. ESG disclosures were measured using a disclosure scoring approach, while panel regression techniques were employed to analyse the data. The findings revealed that environmental disclosure had a positive but statistically insignificant relationship with ROA and a negative but statistically insignificant relationship with MVS. Social disclosure had positive relationships with both ROA and MVS, but the relationships were statistically insignificant. Governance disclosure had a negative and statistically insignificant relationship with ROA but a positive relationship with MVS. The study concludes that ESG disclosures do not exert a uniform influence on the financial performance of listed insurance firms in Nigeria. The study contributes to the literature by providing sector-specific evidence on the individual effects of ESG disclosure dimensions on both accounting and market measures of financial performance, based on comprehensive evidence from all listed insurance firms in Nigeria. The study recommends improved quality, consistency and relevance of ESG disclosures, alongside stronger regulatory guidance, to enhance their usefulness to investors and other stakeholders.