ABSTRACT Ghanaian public firms are increasingly required to adopt sustainable Environmental, Social, and Governance (ESG) practices, aligning with increasing investor demands and the nation's commitment to achieving the Sustainable Development Goals (SDGs). This study investigates the impact of ESG performance on the firm value of Ghanaian listed firms and identifies which dimensions of ESG significantly impact firm value. To gauge ESG performance, the study analyzed the annual reports of 33 companies on the Ghana Stock Exchange (GSE) over 2018 to 2022, utilizing the Global Reporting Initiative (GRI) standards as a guiding framework. The study employed panel data covering the firms for the period and a Fixed effect Least Square Dummy Variable model to investigate the impact of ESG performance and its dimensions on firm value. The findings suggest that Composite ESG performance is positively and significantly associated with firm value. Furthermore, there is a significant positive association between the individual ESG pillars—Environmental, Social, and Governance—and firm value, with governance demonstrating the most significant impact, followed by social and then environmental performance. To the best of our knowledge, this study is the first to empirically examine ESG performance and firm value in Ghana, offering evidence in support of the stakeholder theory in the African context. Unlike prior research, this study disaggregates ESG pillars to assess their individual impacts and introduces a novel GRI‐based binary scoring system. This research contributes to academic knowledge and provides a strategic roadmap for firms to leverage ESG integration as a value‐enhancing tool and offers guidance to policymakers in strengthening sustainable business policies.
Nyamedi et al. (Tue,) studied this question.