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Effect of mandatory sustainability performance disclosures on firm value: Evidence from listed European firms

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  • Madhavan Vishnu Nampoothiri
  • Oliver Entrop
  • Thillai Rajan Annamalai

Abstract

Corporate Sustainability Performance (CSP) reporting is becoming increasingly important to investors who seek to identify and invest in companies that are managing their Environmental, Social and Governance (ESG) risks effectively. The European Union's Non‐Financial Reporting Directive (NFRD), which was implemented in 2017, mandates that certain large companies must disclose their sustainability performance. This study examines the impact of the EU NFRD on the firm value of listed European firms using a difference‐in‐differences regression model. We find that the mandatory disclosure of corporate sustainability performance does not significantly affect firm value at an aggregate level. However, the results suggest minor inter‐industry differences, which can be attributed to varying sustainability performance metrics across industries. These findings contribute not only to the nascent literature on mandatory sustainability disclosures but also to the deliberations of policymakers and regulators across the world who are devising and implementing mandatory corporate sustainability performance disclosure regulations.

Suggested Citation

  • Madhavan Vishnu Nampoothiri & Oliver Entrop & Thillai Rajan Annamalai, 2024. "Effect of mandatory sustainability performance disclosures on firm value: Evidence from listed European firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(6), pages 5220-5235, November.
    • Handle: RePEc:wly:corsem:v:31:y:2024:i:6:p:5220-5235
    DOI: 10.1002/csr.2860
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    References listed on IDEAS

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    1. Tommaso Fornasari & Marco Traversi & Mariasole Bannò, 2026. "The Role of Corporate Governance in Enhancing Environmental and Social Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 35(4), pages 4876-4894, May.
    2. Aziza Garsaa, 2025. "How Has the COVID‐19 Crisis Affected the Link Between ESG Disclosure and Firm Value? A Two‐Level Analysis of European Listed Companies," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 34(4), pages 2390-2407, October.
    3. Bax, Karoline & Paterlini, Sandra & Valentini, Odino, 2026. "Corporate sustainability reporting directive impact on risk framing and commitment specificity: Evidence from EURO STOXX 50," Economics Letters, Elsevier, vol. 261(C).
    4. Sakhr Bani-Khaled & Graça Azevedo & Jonas Oliveira, 2025. "Environmental, social, and governance (ESG) factors and firm value: A systematic literature review of theories and empirical evidence," AMS Review, Springer;Academy of Marketing Science, vol. 15(1), pages 228-260, June.
    5. Zhu, Qinghua & Yang, Jinyu & Chen, Yuan, 2026. "Mitigating financial loss from global supply chain ESG regulations: Can ESG performance help?," Journal of Business Research, Elsevier, vol. 202(C).

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