INFORMATION ASYMMETRY AND ESG PERFORMANCE

Environmental, Social, and Governance (ESG) performance has emerged as a critical measure of corporate sustainability, yet its effectiveness may be undermined by information asymmetry. This study investigates the effect of information asymmetry on ESG performance among publicly listed firms. The problem lies in the limited transparency and unequal access to information between corporate insiders and external stakeholders, which may hinder effective ESG evaluation and decision-making. The purpose of the study is to examine whether higher levels of information asymmetry negatively impact firms’ ESG outcomes. Using a panel data set of 143 firms listed on the Nigerian Exchange from 2014 to 2023, the study adopts a random effects regression model. The findings reveal a significant negative relationship between information asymmetry and ESG performance, suggesting that firms with higher opacity are less likely to adopt robust ESG practices. Limitations include the reliance on secondary data and proxies for asymmetry and ESG. The study provides practical implications for regulators, investors, and firms, encouraging enhanced disclosure. The research is original in its focus on an emerging economy context.