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The impact of social, environmental and corporate governance disclosures on firm value: Evidence from Egypt

Ahmed Aboud (School of Business and Law, University of Portsmouth, Portsmouth, UK) (Faculty of Commerce, Beni-Suef University, Beni Suef, Egypt)
Ahmed Diab (Faculty of Commerce, Beni-Suef University, Beni Suef, Egypt)

Journal of Accounting in Emerging Economies

ISSN: 2042-1168

Article publication date: 5 November 2018

Issue publication date: 5 November 2018

6038

Abstract

Purpose

The purpose of this paper is to examine the impact of environmental, social, and governance (ESG) practices disclosure and firm value in the Egyptian context. This is done through investigating the influence of being listed and ranked in the Egyptian Corporate Responsibility Index on firm value during the period starting from 2007 to 2016.

Design/methodology/approach

Using univariate and multivariate analyses, the findings support the economic benefits of ESG disclosures.

Findings

The authors find that firms listed in the ESG index have higher firm value, and that there is a positive association between firms’ higher rankings in the index and firm value, as measured by Tobin’s q.

Research limitations/implications

The findings provide feedback to regulators and standard-setters in the developing countries, and more specifically the Egyptian regulators, on the benefits associated with the introduction of the sustainability index (Standard & Poor’s (S&P)/EGX ESG index). This, in turn, clarifies how the government’s efforts to promote ESG provide benefits to publicly traded firms.

Practical implications

By linking ESG to firm value, the ESG index will enable investors to take a leading role in inducing firms to enhance transparency and disclosure, and hence, improving their reporting standards. This, in turn, will ultimately result in improving sustainability and governance practices in Egypt.

Social implications

The reported positive market reactions to social and governance practices disclosures can motivate firms to improve their social and governance performance.

Originality/value

The study contributes to the literature by addressing the combined economic effects of social and governance disclosures on firm value, and by investigating the economic effects of such disclosures on firm value in an emerging market.

Keywords

Citation

Aboud, A. and Diab, A. (2018), "The impact of social, environmental and corporate governance disclosures on firm value: Evidence from Egypt", Journal of Accounting in Emerging Economies, Vol. 8 No. 4, pp. 442-458. https://doi.org/10.1108/JAEE-08-2017-0079

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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