Title: Corporate governance antecedents and value relevance of environmental, social, and governance disclosures: insights from Indian listed firms

Authors: Sankalp Purushottam Naik; Riyanka Baral; A.V.S. Durgraprasad; Ch. V.V.S.N.V. Prasad

Addresses: Department of Economics and Finance, BITS Pilani, K.K. Birla Campus, Zuaringar, 403726, Goa, India ' India International University of Legal Education and Research, Upasnagar, Sancoale, Goa 403726, India ' Department of Economics and Finance, BITS Pilani, K.K. Birla Campus, Zuaringar, 403726, Goa, India ' Department of Economics and Finance, BITS Pilani, K.K. Birla Campus, Zuaringar, 403726, Goa, India

Abstract: The environmental, social, and governance (ESG) tag has gained currency amidst the increased fervour surrounding sustainability and climate change. Regulators have ardently backed ESG reporting, and company boards have optimistically obliged. Despite the enthusiasm and endorsement from stakeholders, the enigma around ESG determinants and value relevance persists. This paper aims to identify ESG antecedents among Indian-listed firms and assess ESG's role in value creation. The antecedents are chosen from corporate governance and corporate finance literature. Antecedents are also tested across individual ESG pillars, a rarity in ESG studies. Findings suggest that board gender diversity (BGD), board independence (BoardIND), firm size, and financial leverage enhance ESG reporting. BGD positively influences environmental and social disclosures, while BoardIND encourages governance-related disclosures. ESG disclosures have improved among Indian firms, but the results do not indicate any significant role for ESG disclosures in value creation. This is in sharp contradiction to the trends observed for developed economies. ESG embeddedness in India is still nascent and has a long way to go before it can align itself with investor expectations.

Keywords: corporate governance; firm value; environmental, social, and governance; ESG; board gender diversity; BGD; disclosure; board independence.

DOI: 10.1504/IJCG.2024.138081

International Journal of Corporate Governance, 2024 Vol.14 No.2, pp.169 - 188

Received: 23 Apr 2023
Accepted: 15 Dec 2023
Published online: 21 Apr 2024 *

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