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Moderating Role of Board Independence on the Relationship Between ESG Disclosure Quality and Firm Value: Evidence from Listed Manufacturing Firms in Nigeria

Kpochi C. Toryila

Abstract

This study investigates the moderating influence of board independence on the relationship between Environmental, Social, and Governance disclosure quality and firm value, proxied by Tobin’s Q, among 22 listed manufacturing companies in Nigeria from 2015 to 2024 (220 firm- year observations). Employing a random effects panel regression model with robust standard errors, the findings indicate that ESG disclosure quality exerts a significant positive direct effect on firm value. Board independence significantly and positively moderates this relationship, strengthening the value-enhancing impact of high-quality ESG disclosures. These results are robust to alternative specifications and endogeneity checks. Anchored primarily in legitimacy theory and supported by stakeholder and agency perspectives, the study underscores the critical role of independent directors in ensuring credible sustainability reporting that translates into market valuation premiums in emerging economies. Policy implications include strengthening board independence requirements and mandating comprehensive ESG reporting for Nigerian listed firms to enhance investor confidence and sustainable value creation.

Keywords

ESG disclosure qualityboard independencefirm valueTobin’s Qcorporate governancemanufacturing sectorNigeria.

References

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