Voluntary disclosure and market value of listed financial firms in Nigeria moderated by audit committee independence

Abstract

This study investigates the influence of voluntary disclosure practices specifically environmental, social, and governance (ESG) disclosures on the market value of listed financial firms in Nigeria, with particular emphasis on the moderating role of audit committee independence. Adopting an ex-post facto research design, the study utilizes secondary data obtained from 45 listed financial firms covering the period from 2015 to 2024. Panel regression analysis is employed to evaluate the impact of the various disclosure dimensions on firm value, measured using Tobin’s Q. The Hausman specification test is conducted to determine the appropriate estimation technique, with results supporting the use of the random effects model. Empirical findings indicate that environmental and governance disclosures exert a statistically significant positive effect on market value, whereas social disclosure on its own does not show a significant relationship with firm valuation. However, when moderated by audit committee independence, social disclosure demonstrates a significant positive effect. The results further suggest that the effectiveness of voluntary disclosures is contingent upon the strength of corporate governance structures, particularly the audit committee. Consequently, the study concludes that financial firms aiming to enhance market value should emphasize transparent environmental and governance reporting, while strengthening audit committee independence to maximize the value relevance of social disclosures. Additionally, regulators may consider formulating policies that encourage comprehensive and reliable disclosure practices to strengthen investor confidence within the financial sector.