The Impact of ESG Disclosure on Firm Value with Reference to Indian Capital Markets
DOI:
https://doi.org/10.62737/336b5743Keywords:
ESG Disclosure, Firm value, Sustainability Reporting, Indian Capital MarketsAbstract
Environmental, Social and Governance (ESG) disclosure has become a significant concern in capital markets as investors increasingly evaluate companies based on sustainability data in addition to financial performance. In India, regulatory initiatives like the Securities and Exchange Board of India’s Business Responsibility and Sustainability Reporting (BRSR) framework have emphasized the significance of transparent ESG disclosure. The objective of the study is to evaluate the impact of ESG disclosure on firm value in Indian capital markets. Despite expanding global evidence confirming the value relevance of ESG disclosure, empirical research in the Indian context is lacking. The majority of present research focuses on corporate social responsibility expenditure or isolated environmental disclosures leaving a research gap in the area of full ESG disclosure and firm value. The study uses a quantitative research design with secondary data from 2019-20 to 2023-24. Purposive sampling includes Ten large Indian listed companies namely Reliance Industries Limited, TATA Consultancy Services, Infosys Limited, HDFC Bank, ICICI Bank, Hindustan Unilever Limited, ITC Limited, Larsen & Toubro, Bharti Airtel and TATA Steel. These businesses were chosen because of their extensive market presence, consistent ESG disclosures, access to credible firm value data and sectoral diversity making them the ideal for studying the ESG and firm value relationship in Indian capital markets. ESG data and firm value indicators such as Tobin’s Q and market capitalization are obtained from company websites and annual reports. Regression Analysis was used to find the impact of each ESG disclosures on firm value. The study is expected to suggest that more ESG disclosure boosts corporate value by improving investor trust and market valuation. The study’s main shortcomings however are its reliance on secondary data, the variability in ESG assessment techniques and small sample size.
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