Thesis:

Effect of environmental, social and governance disclosures on firm value: a case of firms listed at the Nairobi securities exchange

Corporate sustainability reporting has gained prominence due to the growing emphasis on corporate responsibility, particularly regarding environmental, social, and governance matters. This practice enables companies to maintain transparency with their stakeholders. The purpose of this study was to evaluate the extent of ESG disclosures and their effect on the value of firms listed on the Nairobi Securities Exchange. The research objectives included analyzing how environmental, social, and governance disclosures individually influence firm value and assessing the moderating role of leverage in this relationship. The study was guided by stakeholder theory, legitimacy theory, and discretionary disclosure theory. A positivist research approach and descriptive research design was employed. The study focused on all 63 companies listed on the NSE, with managers serving as the primary units of observation. Through census sampling, one manager was selected from each firm, resulting in a total of 63 respondents. Data analysis was carried out using SPSS software, utilizing both descriptive and inferential statistical methods. Descriptive analysis involved the use of percentages and frequency distributions, while inferential analysis included Pearson correlation and multiple linear regression. The regression model helped determine the strength and nature of the relationship between the dependent and independent variables outlined in the study. Findings revealed that economic disclosure significantly and positively impacts firm value, as evidenced by a strong coefficient of +0.353 and a statistically significant p-value of 0.019. However, environmental disclosure showed a negative but statistically insignificant effect, with a coefficient of -0.03. Similarly, social disclosure demonstrated a weak positive but non-significant effect on firm value. Based on these findings, the study concluded that while governance (economic) disclosure plays a crucial role in enhancing firm performance, environmental and social disclosures currently have limited measurable impacts on firm value within NSE-listed firms. The study recommends that NSE-listed companies prioritize governance disclosures to improve transparency, investor confidence, and financial performance. It also suggests further research into other corporate governance practices that may influence firm value, as well as an expanded focus on different industries to enhance the generalizability of these findings.