Effect of Sustainability Reporting on Firm Value: Evidence from the Nairobi Securities Exchange, Kenya

Abstract

Purpose: The main objective of this study was to examine the effect of sustainability reporting on firm value among companies listed in the Nairobi Securities Exchange, Kenya. Methods/material: The study target population includes all 64 NSE listed companies. The study employed use of secondary data collected from annual reports sourced from NSE and firms’ websites for eleven (11) years from 2012-2022. Content analysis technique was employed for collection of data using data collection sheet. This research used longitudinal research and correlational research design. Findings: Findings showed that economic reporting had negative and significant effect on firm value, while environmental reporting had positive and significant effect on firm value. However, social reporting had insignificant effect on firm value. Conclusion/implication: This suggests that social reporting practices may not have a substantial impact on firm value in the context of the Nairobi Securities Exchange. Firms that engaged in extensive economic reporting were associated with lower firm value. Firms with higher levels of environmental disclosure were associated with higher firm value. Therefore, the studyrecommends that companies should review their current economic reporting practices and identify areas where they can reduce the amount of information they disclose. Managers should focus on enhancing the quality and transparency of economic and environmental reporting to improve investor confidence and trust.