Effect of Sustainability Disclosure on Price Earnings and Enterprise Value of Listed Industrial Goods Companies in Nigeria

ABSTRACT: This paper questions how sustainability disclosure (SD) affects the price-earnings (P/E) ratio and enterprise value (EV) of listed industrial goods companies in Nigeria. SD is proxied by environmental disclosure (ENV), social disclosure (SOC), and governance disclosure (GOV), while firm size is measured using the logarithm of total assets utilised as a control variable in this study. Panel Regression through the Hausman test, Chow F-test, LM test, and Variance Inflation Factor (VIF) are employed to determine the most appropriate model and ensure the robustness of the estimates. The results of the fixed effect show that GOV has a positive and significant effect on EV, indicating that strong governance practices enhance enterprise valuation. SOC exhibits a negative and significant effect on EV but a positive and significant effect on P/E ratio, meaning that while social reporting may be perceived as cost-inducing in overall enterprise worth, it enhances investor expectations and earnings multiples. ENV shows a negative but insignificant effect on both EV and P/E ratios. Firm size exerts an adverse and significant effect on EV but an insignificant effect on the P/E ratio. The study concludes that SD influence EV and P/E in Nigeria’s industrial goods sector, with governance disclosure being most relevant for EV and social disclosure driving earnings-based valuation. It recommends that firms strengthen governance transparency and adopt more strategic and cost-efficient social disclosure practices to improve both enterprise value and market-based valuation in the industrial sectors.