Impact of corporate climate change disclosure on firm performance: empirical evidence from an emerging economy

Biswajit Ghose, Nivaj Gogoi, Premendra Kumar Singh and Kiran Gope

Sustainability Accounting, Management and Policy Journal, 2024, vol. 16, issue 2, 389-414

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: Corporate climate change disclosure; TCFD; Firm performance; CEO duality; COVID-19; India (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sampjp:sampj-09-2023-0714

DOI: 10.1108/SAMPJ-09-2023-0714

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