EFFECT OF SUSTAINABILITY DISCLOSURE ON FIRM’S VALUE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examines the effect of sustainability disclosure on the firm value of deposit money banks in Nigeria. Employing a panel data approach covering the period 2015–2024, the study evaluates sustainability disclosure through three dimensions environmental, social, and governance using an aggregated Sustainability Disclosure Index (SUD). Firm value is measured using Tobin’s Q, while firm size and leverage serve as control variables. A fixed-effects panel regression model, guided by the Hausman specification test, is applied to determine the relationships between sustainability disclosure and firm value. The results indicate that aggregate sustainability disclosure has a positive and statistically significant effect on firm value, with governance disclosure exerting the strongest influence, followed by social and environmental disclosure. Firm size is positively associated with firm value, whereas leverage exhibits a negative effect. The findings underscore the strategic importance of comprehensive Environmental, Social, and Governance (ESG) reporting in enhancing investor confidence, reducing information asymmetry, and improving market-based firm performance. The study recommends that deposit money banks strengthen their sustainability reporting practices, with particular emphasis on governance disclosure, and that regulatory authorities continue to enhance ESG reporting frameworks to foster transparency and sustainable financial performance.