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Sustainability Reporting and Market Uncertainty: The Moderating Effect of Carbon Disclosure

Author

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  • Ahmed Saber Moussa

    (Customs Authority, Ministry of Finance Egypt, Nasr City 11635, Cairo, Egypt)

  • Mahmoud Elmarzouky

    (St Andrews Business School, University of St Andrews, The Gateway, North Haugh, St Andrews KY16 9RJ, UK)

Abstract

This research examines how ESG disclosure influences market uncertainty through carbon disclosure. It uses a 10-year dataset from 2012 to 2021 of non-financial U.K. companies in the FTSE All-Share index. This study employs four regression methods to scrutinize the interplay between ESG disclosure, carbon disclosure, and market uncertainty. The research findings uncover a notable reduction in market uncertainty associated with ESG disclosure, aligning with the Information Asymmetry Theory. Interestingly, this study also uncovers that carbon disclosure amplifies this negative relationship, a finding that resonates with the Signaling Theory. These results hold true across various measures of ESG and market uncertainty. This study enriches the sustainability reporting literature with implications for theory and practice. It extends Information Asymmetry and Signaling Theories to U.K. non-financial firms, emphasizing the need for more research on sustainability disclosure. It underscores the role of ESG and carbon disclosure in reducing cost of capital, enhancing firm value, and boosting investor confidence. It calls for transparent ESG reporting by managers, regulatory promotion of such disclosures, and stakeholder utilization of these to evaluate a firm’s impact and contribution to the SDGs, fostering collaboration on sustainability. This study offers key insights for stakeholders such as managers, investors, regulators, researchers, policy makers, and educators in the realm of sustainability reporting and market dynamics.

Suggested Citation

  • Ahmed Saber Moussa & Mahmoud Elmarzouky, 2024. "Sustainability Reporting and Market Uncertainty: The Moderating Effect of Carbon Disclosure," Sustainability, MDPI, vol. 16(13), pages 1-18, June.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:13:p:5290-:d:1419637
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    References listed on IDEAS

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    Cited by:

    1. Weibo Jin & Yiming Wang & Yi Yan & Hongyan Zhou & Longyu Xu & Yi Zhang & Yao Xu & Yuqi Zhang, 2025. "Digital Economy, Green Finance, and Carbon Emissions: Evidence from China," Sustainability, MDPI, vol. 17(12), pages 1-31, June.
    2. Ahmed Saber Moussa & Mahmoud Elmarzouky & Doaa Shohaieb, 2024. "Green Governance: How ESG Initiatives Drive Financial Performance in UK Firms?," Sustainability, MDPI, vol. 16(24), pages 1-25, December.
    3. Mona Basali, 2025. "Impact of Financial Performance and Corporate Governance on ESG Disclosure: Evidence from Saudi Arabia," Sustainability, MDPI, vol. 17(18), pages 1-19, September.
    4. Tang, Tiantian & Guo, Jiahui & Zou, Liping & Luo, Lu, 2025. "ESG fund performance and fund manager trading strategy: Evidence from China," Global Finance Journal, Elsevier, vol. 67(C).
    5. Sheela Sundarasen & Usha Rajagopalan & Ahnaf Ali Alsmady, 2024. "Environmental Accounting and Sustainability: A Meta-Synthesis," Sustainability, MDPI, vol. 16(21), pages 1-16, October.
    6. Sheela Sundarasen & Usha Rajagopalan & Beata Zyznarska-Dworczak, 2025. "Sustainability Reporting as a Governance Tool for Sustainable Development Goals (SDGs): A Bibliometric and Content Analysis," Sustainability, MDPI, vol. 17(11), pages 1-16, May.
    7. Xinxin Che & Chenhua Song & Jining Li, 2024. "How Do Corporate Environmental, Social, and Governance (ESG) Factors Affect Financial Performance?," Sustainability, MDPI, vol. 16(23), pages 1-23, November.
    8. Eid M Alotaibi & Ashraf Khallaf & Abed Al-Nasser Abdallah & Taisier Zoubi & Awwad Alnesafi, 2024. "Blockchain-Driven Carbon Accountability in Supply Chains," Sustainability, MDPI, vol. 16(24), pages 1-30, December.
    9. Ahmad Alqatan & Walid Simmou & Maha Shehadeh & Faisal AlReshaid & Mahmoud Elmarzouky & Doaa Shohaieb, 2025. "Strategic Pathways to Corporate Sustainability: The Roles of Transformational Leadership, Knowledge Sharing, and Innovation," Sustainability, MDPI, vol. 17(12), pages 1-22, June.
    10. Jing Zhou & Chao Chen & Zhengxing He & Jiaming Tang, 2025. "Carbon Emissions and Economic Growth in the Planting Industry: Evidence from China," Sustainability, MDPI, vol. 17(6), pages 1-27, March.

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