Impact of corporate climate change disclosure on firm performance: empirical evidence from an emerging economy
Sustainability Accounting, Management and Policy Journal
ISSN: 2040-8021
Article publication date: 28 November 2024
Issue publication date: 6 January 2025
Abstract
Purpose
This study aims to investigate the impact of corporate climate change disclosure (CCD) on the financial performance of Indian firms.
Design/methodology/approach
The study is grounded in the principles of signalling theory, legitimacy theory and the cost-benefit analysis approach. The sample for the study includes 77 Indian firms from 2018–2019 to 2021–2022. Required data are collected from published annual reports, sustainability reports and the Ace Equity Database. The explanatory variable CCD is measured using content analysis based on the Task Force on Climate-related Financial Disclosures (TCFD) framework. The panel fixed-effects or random-effects models have been considered for hypotheses testing.
Findings
The disclosure level of CCD and its different components is found to be moderate with an average score of 0.364 among top Indian firms. Regression results reveal a significant positive association between CCD on firms’ market-based performance, suggesting its long-term benefits. Besides, additional analysis indicates the differential impact of CCD on financial performance based on firms’ CEO duality status, industry affiliation and pre-COVID and post-COVID period, thus establishing their moderating role in the observed relationship.
Practical implications
The study highlights the necessity of enhancing climate-related disclosure by Indian firms and strategically leveraging the same to boost their financial performance.
Originality/value
Few studies have examined the implications of CCD (based on the TCFD framework) on firm performance. Moreover, exploring the moderating role of CEO duality, industry type and COVID-19 in the CCD and firm performance relationship is a novel empirical contribution.
Keywords
Citation
Ghose, B., Gogoi, N., Singh, P.K. and Gope, K. (2025), "Impact of corporate climate change disclosure on firm performance: empirical evidence from an emerging economy", Sustainability Accounting, Management and Policy Journal, Vol. 16 No. 2, pp. 389-414. https://doi.org/10.1108/SAMPJ-09-2023-0714
Publisher
:Emerald Publishing Limited
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