The Effect of Environmental, Social and Governance Reporting on Firms' Financial Performance: Evidence from Listed Banks on the Ghana Stock Exchange

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:This study offers empirical evidence from an underexplored region (Africa) on the ESG-financial performance link, contributing to the broader debate with a focus on banks.

🏢実務担当者:Banks can use these findings to justify investments in ESG reporting as a means to improve financial metrics like ROA and ROE.

🏛政策担当者:Policymakers in emerging markets can consider promoting ESG reporting standards based on evidence that it can positively impact bank profitability.

The study aimed to investigate the impact of Environmental, Social, and Governance (ESG) reporting on financial performance in commercial banks in Ghana. ESG reporting has become increasingly important for firms as stakeholders demand greater transparency and accountability for their actions. The study aimed to determine the relationship between ESG reporting and financial performance in commercial banks in Ghana. The study employed a positivist research philosophy and a quantitative research approach, involving the collection and analysis of numerical data. The study utilised archival research as a research strategy, which involved extracting data and supporting documentation from authentic archives. The population of the study consisted of the ten commercial banks listed on the Ghana Stock Exchange (GSE). The study employed a purposive sampling technique, selecting banks with data spanning from 2009 to 2020 at the Ghana Stock Exchange. A panel regression analysis was conducted using the STATA version 14 software to determine the impact of ESG reporting, liquidity, growth, and firm size on net profit, return on assets (ROA), and return on equity (ROE). The study found that ESG reporting had a statistically insignificant negative effect on net profit when controlling for liquidity, growth, and firm size. However, the results revealed a statistically significant positive relationship between ESG reporting and ROA, suggesting that ESG reporting is positively associated with a bank's profitability. The study also found that ESG reporting had a statistically significant positive effect on ROE, suggesting that ESG reporting is associated with increased shareholder value. Banks should be encouraged to educate their stakeholders on the benefits of ESG reporting, such as enhanced reputation, improved financial performance, and better risk management. This could help to foster a culture of sustainability within the banking industry and ultimately contribute to a more sustainable and socially responsible business environment. Despite the growing trend of ESG disclosure and reporting around the globe, it is worth mentioning that studies on ESG reporting on different dimensions of financial performance are non-existent or scarce in Ghana and Africa as a whole. As a result, the findings obtained in this current study will provide empirical evidence to determine how reports about environmental, social and governance impacts are critical to other aspects or dimensions of financial performance. The present study contributes to the ongoing debate on the effect of ESG reporting on firms' corporate financial performance (CFP) by providing empirical evidence from listed banks on the Ghana Stock Exchange (GSE).  The study’s findings have important implications for policymakers, practitioners, and researchers. Policymakers should promote and regulate ESG reporting standards to ensure transparency and accountability among market participants. Practitioners, particularly banks, should invest in effective ESG implementation and communication strategies, as they may lead to improved stakeholder relationships and financial performance. Researchers should continue to explore the relationship between ESG reporting and financial performance, taking into account the potential moderating factors and the role of different theoretical perspectives.

• openaire https://doi.org/10.14738/abr.1305.18810first seen 2026-05-05 19:08:31