The Economic Tradeoff of Sustainability Reporting: Empirical Analysis of Listed Firms in Nigeria

Abstract Despite the growing emphasis on sustainability reporting, its economic trade-offs remain contentious, particularly in emerging economies where regulatory frameworks are still evolving. This study examines the impact of sustainability reporting on economic value added (EVA) among listed firms in Nigeria, addressing a critical gap in understanding whether environmental, social, economic, and governance sustainability disclosures translate into tangible financial benefits. Using an ex-post facto research design, the study analyzes secondary data from 57 purposively sampled firms listed on the Nigerian Exchange (NGX) between 2012 and 2023. Employing panel data regression with Panel Corrected Standard Errors (PCSEs) to account for heteroscedasticity and autocorrelation, the study evaluates the relationship between EVA and four dimensions of sustainability reporting—economic (ECSR), social (SOSR), environmental (EVSR), and governance (GOSR). The findings reveal a significant positive impact of economic, social, and environmental sustainability disclosures on EVA, with environmental sustainability exerting the strongest effect, indicating that firms prioritizing environmental responsibility enjoy superior financial outcomes. However, governance sustainability reporting does not exhibit a statistically significant relationship with EVA, suggesting that governance disclosures alone may not enhance firm value unless supported by robust corporate governance practices. These results underscore the economic benefits of sustainability initiatives, reinforcing the argument that firms integrating sustainability into their core strategies can enhance long-term financial performance and investor confidence. The study recommends that corporate managers embed sustainability into operational strategies rather than treating it as a compliance requirement, while regulators should strengthen sustainability disclosure policies to improve reporting quality. Investors should prioritize firms with strong environmental and social disclosures, as these tend to deliver higher economic value. Future studies should explore sector-specific sustainability impacts, incorporating more granular sustainability metrics and considering the moderating effects of regulatory environments to provide deeper insights into sustainability’s role in corporate financial performance