Impact of Environmental, Social, and Governance (ESG) Disclosures on Firm Valuation: A Comparative Study of Emerging vs. Developed Markets

Abstract

This study examines the impact of environmental, social, and environmental sustainability (ESG) disclosures on firm valuation in developed and emerging markets. The study employs a quantitative research design, using a comparative approach to examine the relationship between ESG disclosures and firm valuation across emerging and developed markets. Data collection will involve secondary data extraction from financial databases and corporate annual reports covering a period of five years (2019-2023). The findings demonstrate that firms with higher ESG scores demonstrated a consistent increase in market capitalization and Tobin's Q ratio, indicating a favorable market perception linked to ESG transparency. The sectoral analysis revealed that the financial sector in developed markets exhibited the highest sensitivity to the ESG reporting practices, with a 25% increase in valuation per unit increase in ESG score. The findings highlight the necessity for companies to tailor their ESG strategies to meet the expectations of their specific market contexts, enhancing investor confidence and market valuation.