Does Sustainability Reporting Influence Firm Value of Emerging Economies?

This study aimed to examine the impact of sustainability reporting on firm value in emerging economies, specifically focusing on listed Agriculture and Natural Resources firms in Nigeria. The primary objective was to investigate how various dimensions of sustainability reporting—namely, sustainable environmental disclosure (SED), sustainable social disclosure (SSD), and sustainable governance disclosure (SGD)—influence firm value, as measured by Earnings Per Share (EPS). Additionally, the study sought to understand the role of firm size as a control variable in this relationship. An ex post facto research design was adopted for this study, which involved the analysis of secondary data from publicly available annual and sustainability reports of all nine listed firms on the Nigerian Stock Exchange (NGX) in the Agriculture and Natural Resources sectors. The variables were meticulously measured, with sustainability disclosures evaluated using content analysis and financial performance captured through EPS. The data were analysed using descriptive statistics, correlation analysis, and panel regression methods. The regression results indicate that firm size significantly enhances firm value, as larger firms tend to have higher EPS, reflecting economies of scale and better resource management. Notably, sustainable social disclosure (SSD) was found to have a positive and significant impact on EPS, suggesting that firms engaging in robust social reporting practices, such as transparent labour practices and community engagement, tend to achieve better financial performance. Conversely, sustainable environmental disclosure (SED) and sustainable governance disclosure (SGD) exhibited negative relationships with EPS. Therefore, this study concludes that sustainability reporting enhances firm value in emerging economies, particularly in the listed agriculture and natural resources sectors in Nigeria. Based on these findings, it was recommended that Firms in the agriculture and natural resources sectors should prioritize and further invest in sustainable social disclosure. Although environmental and governance disclosures are critical, their current negative impact on EPS suggests the need for more cost-effective and strategic reporting methods. Firms should consider streamlining their reporting processes and implementing efficiency measures to minimize compliance costs without compromising the quality and comprehensiveness of the information disclosed.