Abstract:
Purpose: Our study aims to explore the extent to which ESG disclosure (non-fmancial
information) affects the financial performance and market value ofthe Pakistani companies.
Methodology & Design: The data is analyzed using EViews software, a statistical tool
developed for data analysis. Numerous tests were applied on the data set which includes
descriptive statistics, correlation analysis, Hausman test. Multiple regression was used to test
the overall fitness ofmodel and to find the significance of hypothesis.
Findings: The results suggests that ESG disclosure is not relevant for Pakistani companies
when tested forthe impact on financial performance but was found to be relevant for the market
value. It reveals that disclosing non-fmancial information don’t affect the financial returns of
a company however it increases the stakeholders confidence and firms reputation while
reducing the financial risks and operating costs.
Limitations: The study used Bloomberg ESG disclosure scores to measure the ESG
limited number ofPakistani listed companies. Also, it has performance, but Bloomberg have
adopted aggregate ESG disclosure score due to availability of combined scores on Bloomberg
thus the study couldn’t explore the impact of each component on either financial or market
value offirms.
Recommendations: Firms must increase their ESG disclosure and revealing information into
their financial reports. This will allow investors and stakeholders to have clear insights
ESG performance allowing them to make decisions easily. The company must develop
the priorities of stakeholders. Also, ESG disclosure was found
. There is a need
on
firm’s
its disclosure strategies as per
to be relevantly low in Pakistani companies due to lack ofregulatory pressure
to enforce sustainability disclosure by legislated bodies
