ESG practices and firm value: Evidence from listed financial firms in Nigeria

Purpose: This study examined the effect of Environmental, Social, and Governance (ESG) practices on the value of listed financial firms in Nigeria. Specifically, the study investigated the effect of Environmental Practice Disclosure Index (EPDI), Social Practice Disclosure Index (SPDI), and Governance Practice Disclosure Index (GPDI) on firm value. Methodology: The study adopted an ex-post facto research design. The population comprised deposit money banks in Nigeria, while the sample consisted of all seven internationally licensed deposit money banks listed on the Nigerian Exchange Group (NGX). A census sampling technique was employed, covering the period from 2015 to 2024. Data were obtained through content analysis of ESG disclosure items extracted from the annual reports of the selected banks. Multiple linear regression analysis was used to examine the relationship between ESG disclosure practices and firm value. Results and Conclusion: The findings revealed that ESG disclosures have a significant effect on the value of listed financial firms in Nigeria. Among the ESG dimensions, Governance Practice Disclosure Index (GPDI) exerted the strongest influence on firm value, while Environmental Practice Disclosure Index (EPDI) and Social Practice Disclosure Index (SPDI) demonstrated relatively minimal effects. The study concluded that governance-related disclosures are the most influential ESG component in enhancing the value of listed financial firms in Nigeria. Findings: The findings imply that ESG disclosure practices serve as important signals of transparency, accountability, and quality in the Nigerian banking sector. Enhanced governance disclosures, in particular, can strengthen investor confidence and distinguish high-performing banks from institutions with potential hidden risks. Consequently, financial firms should prioritize comprehensive ESG reporting, especially governance-related disclosures, to improve market valuation and stakeholder trust.