Sustainability Reporting and Cost of Capital: The Moderating Role of Corporate Transparency in Reducing Financing Constraints in Nigeria

John Ogwo Madukwe, Promise Ezinne Eleke and Glory Ihuaku Ndukwe
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John Ogwo Madukwe: Department of Accounting, College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Nigeria.
Promise Ezinne Eleke: Department of Banking and Finance, Faculty of Business Administration, University of Nigeria, Nsukka, Nigeria.
Glory Ihuaku Ndukwe: Department of Accountancy, Faculty of Business Administration, University of Nigeria, Nsukka, Nigeria.

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Abstract: This paper examines the relationship between sustainability reporting, corporate transparency and cost of capital in listed manufacturing firms in Nigeria. It adopts panel data from a population of 76 firms, with a sample of 38 firms based on data availability for the years 2014-2023, providing 380 firm-year observations. The study used an ex post facto research design and applied Fixed Effects panel regression analysis to the data. Sustainability reporting was assessed through a disclosure index and corporate transparency was measured by disclosure quality and board independence. The results show that sustainability reporting exerts a significant negative impact on cost of capital (β = −0.182, p < 0.01), and corporate transparency also significantly lowers the cost of capital (β = −0.147, p < 0.05). Moreover, the interaction between sustainability reporting and corporate transparency enhances cost reduction effects. The findings suggest that improved ESG disclosure and governance practices boost investor trust and alleviate financing constraints. The study suggests more stringent regulatory enforcement and corporate support for sustainability reporting.

Date: 2026-05-16
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Published in Journal of Global Economics, Management and Business Research, 2026, 18 (2), pp.171-184

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05626012

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