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The Impact of ESG Disclosure Components on Firm Performance: Evidence from the GCC Financial Sector |
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PP: 1031-1041 |
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doi:10.18576/jsap/150405
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Author(s) |
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Amna Hameed,
Zakeya Sanad,
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Abstract |
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| Environmental, social and governance (ESG) disclosures have a sustainable strategic position between firm’s objectives and its changing environment and can have a significant effect on its capability to attract funds, improve competitiveness, build a strong reputation in the market, and hence improve firm’s performance. ESG disclosure is widely acknowledged in many business settings as an effective tool to measure corporate sustainability. The objective of the present study is to analyze the impact of environmental, social, and governance disclosure on firm’s performance. The study employed a panel dataset of 63 firms from 2023 to 2025. The findings of this study showed that governance disclosure has a significant and positive impact on firms’ performance measured using Return on Assets (ROA), while environmental and social disclosures have insignificant relationships with ROA. Further analyses were done and the results confirmed that governance as well as social disclosures have direct impact on shareholders’ return using return on equity (ROE) as well as Tobin’s Q confirming their contribution to stakeholders’ trust and firm reputation. The environmental aspect of the ESG disclosure did not have any significant impact on any of the performance indicators, which makes it perceived as less financial material compared to the governance and social activities. There are several implications of the findings for different stakeholders; regulatory bodies; practitioners; and administrative authorities in both government and firms. We further recommend policymakers should closely monitor the progress of ESG disclosure and consider making environmental and social disclosures mandatory, similar to governance disclosure, to enhance their actual impact on firms’ performance. |
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