The Effect of Environmental, Social and Governance Disclosures on Firm Value: With Special Reference to Listed Firms in CSE

This study empirically verifies whether the environmental, social, and governance disclosures impact on firm value of the companies listed on the Colombo Stock Exchange. The Data were drawn from published annual reports and sustainability reports covering the period from 2014/2015 to 2018/2019 relating to 50 companies. The study developed individual and integrated indices to measure the ESG disclosures and examine the individual and collective effect of ESG disclosures on firm value. The study found that social and governance disclosures positively and significantly impact firms' value, whereas environment disclosures do not significantly impact firms' value. However, integrated ESG disclosures positively and significantly influence the firm value. The study suggests that the market positively and significantly values the social and corporate governance disclosures as well as the combined ESG disclosures carried out by the companies in Sri Lanka. This study contributes to the extant literature being the first empirical study to examine the impact of ESG factors on the value of the Sri Lankan public quoted companies.