Effect of Sustainability Reporting on Value of Listed Financial Services Companies in Nigeria

Abstract

This study investigates the effect of sustainability reporting on firm value within the unique institutional context of Nigeria's listed financial services sector. Grounded in Stakeholder Theory, the research examines how four dimensions of sustainability reporting, namely economic disclosure, environmental disclosure, social disclosure, and governance disclosure, influence firm value measured by Tobin's Q. Utilizing an ex-post facto research design, secondary data were collected from the annual reports of 44 listed financial services companies over a ten-year period (2015–2024), resulting in 440 firm-year observations. A census sampling method was employed due to the manageable population size, and the data were analyzed using a Random Effects panel regression model, following diagnostic tests that confirmed homoscedasticity and the appropriateness of the random effect’s estimator. The findings reveal that. Economic disclosure, environmental disclosure, and social disclosure shows significant positive relationships with firm value, Conversely, governance disclosure demonstrates a significant negative relationship with firm value, the study concludes that sustainability reporting practices have meaningful implications for firm value, though the direction and magnitude of effects vary across disclosure dimensions. It recommends that financial services companies prioritize economic, environmental, and social disclosures while ensuring that governance disclosures are substantive rather than merely extensive, and calls for further investigation into the mechanisms underlying the counterintuitive governance disclosure finding.