Nexus among herding behavior, ESG disclosure, and market capitalization in the Egyptian stock market

Mohamed Samy ElDeeb (), Nada Salah ElGabry (), Nesma Mounir () and Mirna Ahmed ()
Additional contact information
Mohamed Samy ElDeeb: October University for Modern Sciences and Arts
Nada Salah ElGabry: October University for Modern Sciences and Arts
Nesma Mounir: October University for Modern Sciences and Arts
Mirna Ahmed: October University for Modern Sciences and Arts

Future Business Journal, 2025, vol. 11, issue 1, 1-17

Abstract: Abstract Purpose This study aims to investigate the impact of herding behavior on environmental, social, governance (ESG) disclosure among firms listed on the Egyptian stock exchange, with the moderating role of market capitalization. Design/methodology/approach The sample consists of 37 Egyptian firms within the EGX70 index covering the period between 2019 and 2023. The analysis employs a panel data analysis using a Fixed Effects Model. ESG disclosure was measured using the ESG index, while herding behavior was measured by stock return dispersion, and market capitalization was measured by multiplying the number of shares outstanding by price. Research Limitation/Implication This study is limited to the context of Egypt and the data sample, with further limitations including a small sample size and the influence of COVID-19 during the time period used. However, this study contributes to the growing literature on ESG and investigates the behavioral drivers of disclosure specifically in the Egyptian stock market. Findings Results reveal that herding behavior has a positive but insignificant relationship with ESG disclosure. The study further investigates the moderating role of market capitalization, which has a positive but insignificant relationship, and has two control variables, with firm size showing a significant positive relationship, while financial leverage shows an insignificant positive relationship with the ESG disclosure. Overall, while some firms may imitate other firms in disclosing ESG practices, herding behavior is not the dominant force for ESG disclosure in Egypt. Theoretical implications The study combined stakeholder theory and behavioral finance to provide evidence that internal and regulatory mechanisms overwhelm herding forces in emerging economies. The research resists typical market imitation thought by placing emphasis on institutional structure and firm-specific resources. Originality/value This study has valuable insights for investors, regulators, and corporate directors by highlighting the limited impact of market imitation and emphasizing the importance of internal company characteristics in ESG disclosure. Moreover, the study suggests that a more robust regulatory framework must be in place and that more awareness initiatives should be implemented to promote better ESG disclosure across the Egyptian financial market.

Keywords: ESG; Herding behavior; Market capitalization; Firm size (search for similar items in EconPapers)
JEL-codes: M14 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1186/s43093-025-00573-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:futbus:v:11:y:2025:i:1:d:10.1186_s43093-025-00573-z

Ordering information: This journal article can be ordered from
https://fbj.springeropen.com/

DOI: 10.1186/s43093-025-00573-z

Access Statistics for this article

Future Business Journal is currently edited by Soad Kamel Rizk and Hayam Wahba

More articles in Future Business Journal from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().