Sustainability Disclosure, Institutional Ownership and Value of Listed Companies in Nigeria

Abstract

Research aim: This study seeks to examine the relationship between sustainability
disclosure and the value of listed companies in Nigeria, using institutional ownership as
a moderator.
Design/ Methodology/ Approach: Data was collected from annual reports and accounts of
the firms and daily price listings of the Nigerian Exchange Group from 2014 to 2021. The
study uses the Feltham and Ohlson (1995) linear information valuation model to estimate
industry-based influence on firm value variations.
Research finding: The results show that economic and environmental disclosures as well
as institutional ownership significantly and positively impact the value of listed firms,
while social disclosure has an insignificant effect. Institutional ownership enhances the
positive effect of economic disclosure, but does not enhance the effect of environmental
disclosure on firm value, and there is no statistical evidence that it affects the impact of
social disclosure on firms’ value.
Theoretical contribution/Originality: The study uses stakeholder and legitimacy theories
to guide decision-making in sustainability disclosure and institutional ownership. It
suggests that greater transparency and accountability in sustainability reporting in Nigeria
are needed.
Practitioner/Policy implication: The study findings support regulators to mandate
sustainability disclosure, raise awareness about its benefits and impact on value, and
encourage investor participation in corporate sustainability decision-making. This would
enhance the value creation and governance process, ultimately leading to better governance
and increased firm value.
Research limitation: This study focuses only on sustainability disclosure of Nigerian
companies in selected sectors of the economy. Future studies can explore the long-term
effects of sustainability disclosures on firm value to understand whether social disclosures
yield delayed financial benefits, investigate the impact of sustainability disclosures on firm
value across different sectors in Nigeria, and explore how governance frameworks influence
the quality of sustainability disclosures and their subsequent effect on firm value.